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FINANCIAL IMPEDIMENT TO THE SUSTAINABLE GROWTH AND
DEVELOPMENT OF SMALL
STATE, NIGERIA
DEP
TAWAL DAUDA SALE PG/M.ED/ 11/ 58802
FINANCIAL IMPEDIMENT TO THE SUSTAINABLE GROWTH AND
DEVELOPMENT OF SMALL-SCALE ENTERPRISES OPERATING IN PLATEAU
STATE, NIGERIA
PARTMENT OF VOCATIONAL TEACHER E
FACULTY OF EDUCATION
Fred Attah
Digitally signed by: Content manager’s
Name
DN : CN = Webmaster’s name
O= University of Nigeri
OU = Innovation Centre
I
FINANCIAL IMPEDIMENT TO THE SUSTAINABLE GROWTH AND
SCALE ENTERPRISES OPERATING IN PLATEAU
DUCATION
: Content manager’s
Webmaster’s name
O= University of Nigeria, Nsukka
OU = Innovation Centre
II
TITLE PAGE
FINANCIAL IMPEDIMENT TO THE SUSTAINABLE GROWTH AND DEVELOPMENT OF SMALL-SCALE ENTERPRISES OPERATING IN
PLATEAU STATE, NIGERIA
BY
TAWAL DAUDA SALE PG/M.ED/ 11/ 58802
DEPARTMENT OF VOCATIONAL TECHEAR EDUCATION (BUSINESS EDUCATION UNIT)
FACULTY OF EDUCATION UNIVERSITY OF NIGERIA, NSUKKA, ENUGU STATE
SUPERVISOR: DR. E. A. C. ETONYEAKU
OCTOBER, 2015
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APPROVAL PAGE
This Project has been approved for the Department of Vocational Teacher
Education, University of Nigeria Nsukka.
By
--------------------------------- -------------------------- DR. E. A. C. ETONYEAKU PROF. C.A. IGBO Supervisor Head of Department ---------------------------------- External Examiner
--------------------------------- PROF. U. C.Umo Dean of Faculty
IV
CERTIFICATION
This is to certify that TAWAL DAUDA SALE, a post graduate student of the
Department of Vocational Teacher Education University of Nigeria Nsukka, with the
registration number PG/MED/11/58802, has satisfactorily completed the requirements for
the research work for the award of Masters in Business Education. This project work is
original and has not been submitted in part or in full for any other degree of this or any
other institution.
------------------------------- ------------------------------- DR. E. A. C. ETONYEAKU TAWAL DAUDA SALE Supervisor Student
V
DEDICATION This work is dedicated to God Almighty and Tawal’s Family.
VI
ACKNOWLEDGEMENTS
To God Almighty be all Glory, honor and thanksgiving for His enablement,
strength, health and wisdom to conclude this programme. Thank you Jesus.
My sincere gratitude goes to my supervisor, Dr. E.A.C. Etonyeaku for patiently
nurturing me with his wealth of experience. You are a model, a counselor and a
motivator. May the good lord richly bless you in Jesus name. It is difficult to fine words
with which to thank all members of VTE family; HOD, Prof. (Mrs.) C.A Igbo, Prof. E.E.
Agomuo, Prof. (Mrs.) C.A Obi, Prof. Osinem, Dr. E.O. Ugwoke and Mrs. Uju Umela,
I appreciate my friends and colleagues who supported me in special ways; Oga
lucky, Anvah Moses, Yaro Tunga, Okoye Hyacinth, Madam Chindungsu, Madam
Roselyn (Class Rep.), Juta Jery, Abanyam (Frenny), Oga Kinsley (vte class rep.), My
Nehemiah Joshua (Nduka), Mrs. Philip kparevfa, all vte PG and Business Education
students of 2011/2012 session.
The researcher is indeed grateful to Baba and Mama Amos Sale (Family) Brother
Yilchir, Uncle Luther, Bro Kefas, Agustine Audu, Biswe, Sunday, Kismang, Gomos,
Gobir, Manpan, Emma, Ropshakka, Batmun, Zenwen, Gaklime, Akila, Gaksewe, Gakle
Kefas COCIN Mannung Reverends, Pastors, Elders, Ushers, Youth and Women
Fellowships, Choir among others. To all my colleagues in BOPs Enugu State Command,
ACP. Daniel Osayande, ASP. Benedit, Sgt. Onyi Joseph , and officer of computer Officer
Ops.
Finally, the researcher is indebted to his beloved members of his family; late Mr
Tawal Sale, Mama Mrs. Esther Tawal Sale, Mr. and Mrs. Vongsing Nicholas, Arch. and
Mrs. Felix Sale, Dr. and Mrs. Tawe Godwin, Mr and Mrs. Tawe Rotnen and My Darling
Miss. Ndam Dorkat. Thanks for your spiritual, moral, social and financial sacrifices. May
the good Lord Bless you all in Jesus name, Amen.
VII
TABLE OF CONTENTS
TITLE PAGE i
APPROVAL PAGE ii
CERTIFICATION iii
DEDICATION iv
ACKNOWLEDGEMENTS v
TABLE OF CONTENTS vi
LIST OF FIGURE ix
LIST OF TABLES x
ABSTRACT xi
CHAPTER ONE: INTRODUCTION
Background of the Study 1
Statement of the Problem 7
Purpose of the Study 9
Significance of the Study 9
Research Questions 11
Research Hypotheses 11
Delimitation of the Study 12
CHAPTER TWO: REVIEW OF RELATED LITERATURE 15
Conceptual Framework
• Meaning of Small-Scale Enterprises
• Role of Small- Scale Enterprises
• Financial Impediments Encountered by Small-Scale Enterprises
• Fund Raising by Small-Scale Enterprises and Credit facilities available to
Small-Scale Enterprises
• Government Financial regulatory Policies in Small - Scale Enterprises
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• Ways of Ameliorating the Financial Impediments of Small-Scale Enterprises.
Theoretical Framework
• Life Cycle Theory.
• Theory of Growth and Size of Firm
Related Empirical Studies 41
Summary of Reviewed Literature 46
CHAPTER THREE: METHODOLOGY
Design of the Study 49
Area of the Study 49
Population for the Study 50
Sampling and Sampling Technique 50
Instrument for Data Collection 50
Validation of Instrument 51
Reliability of the Instrument 51
Method of Data Collection 52
Method of Data Analysis 52
CHAPTER FOUR: PRESENTATION AND ANALYSIS OF DATA
Research Question 1 54
Hypothesis 1 56
Research Question 2 58
Hypothesis 2 59
Research Question 3 61
Hypothesis 3 63
Research Question 4 65
Hypothesis 4 67
Findings of the Study 69
Discussion of Findings 75
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CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIO NS
Re-statement of the Problem 84
Summary of Procedures Used 86
Principal Findings of the Study 87
Implications of the Study 92
Conclusion 95
Recommendations 96
Suggestions for Further Studies 97
References 98
Appendices 104
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LIST OF FIGURE
Figure 1 Schematic representation of Impediments to the Growth of Small Scale Enterprises in Plateau State 63
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LIST OF TABLES
Table 1 Mean ratings on how accessibility of credit facility impedes the growth and development of small scale enterprises operating in Plateau State 84 Table 2 T-test analysis for comparing data obtained from proprietors and employees on the extent to which accessibility of credit facility impede the financing of small scale enterprises in Plateau State 86 Table 3 Mean ratings on how government financial regulatory policies impede the growth and development of small scale enterprises operating in Plateau State 88 Table 4 T-test analysis for comparing data obtained from proprietors and employees on the extent to which government financial regulatory policies impede the financing of small scale enterprises in Plateau State 97 Table 5 Mean ratings on how poor financial management practice impedes the growth and development of small scale enterprises in Plateau State. 92 Table 6 T-test analysis for comparing data obtained from proprietors and employees on the extent to which insecurity of life and property impede financing of small scale enterprises in Plateau State 94 Table 7 T Mean ratings on the ameliorating the financial impediments of small scale enterprises operating in Plateau State.. 96 Table 8 T-test analysis for comparing data obtained from proprietors and employees on the strategies for ameliorating the financial impediments of small scale enterprises operating in Plateau State 98
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Abstract The study of Financial Impediment to the Sustainable Growth and Development of Small-Scale Enterprises Operating in Plateau State, Nigeria employed a descriptive survey design. The study covered only the central senatorial zone in the state with five local governments namely; Pankshin, Mangu, Bokkos, Kanke, and Kanam local government. The population for the study was 206 made up of 57 and 149 registered entrepreneurs and employees of small-scale enterprises in the six local governments in central senatorial zone of Plateau State. Since the total population of the proprietors and the employees are small and manageable no sampling was carried out. The instrument for data collection was a structured questionnaire titled ‘Financial Impediments to Small-Scale Enterprises Questionnaire’, (FISSEQ). The questionnaire items were developed based on the information gathered from the literature reviewed. The questionnaire was subjected to face-validation by three experts. Two of the validates came from the Department of Vocational Teacher Education, University of Nigeria, Nsukka and one of them is from department of Vocational and Technical Education, Ahmadu Bello University Zaria, in Kaduna State. The reliability of the instrument was done using Cronbach Alpha (α) method. The coefficient result yielded 0.86 which was used to establish the internal consistency of the instrument. The researcher with the help of three research assistants administered the questionnaire to the respondents. The data collected for the study was analyzed using mean to answer the research questions and standard deviation to determine the closeness or otherwise of the responses from the mean, while t -test statistic was used to test the null hypothesis of no significant difference at the probability of 0.05 level of significance at relevant degree of freedom with the use of Statistical Package for Social Sciences (SPSS). It was found out that inaccessibility of credit facility, government financial regulatory policies, and poor financial management practices impede the growth and development of small scale enterprises in Plateau State. From the findings of the study, it was recommended amongst others that government and other financial institutions operating in Plateau State should make credit facilities available to all categories of small scale enterprise and should ensure adequate monitoring of how the small scale enterprise utilized the funds.
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CHAPTER ONE INTRODUCTION
Background of the Study
Business exists in different forms and sizes. A business can be undertaken on a
small scale, medium scale or large scale basis. Small and Medium Enterprises (SMEs)
are seen as driving forces that promote and contribute immensely to the economic
development of any country. Small-Scale Enterprises (SSEs) are the backbone of an
economy as major contributors of job creation and play an important role as efficient
providers of intermediate goods and services to large firms (Muhammed, 2010).
The concept of Small-Scale Enterprises (SSEs) varies from country to country,
region to region and from agencies to agencies. Different authors often use different
parameters such as the number of employees, sales volume, turnover and capital to
differentiate small, medium and/or big scale enterprises (Ahmed, 2006). However, these
parameters do not provide uniform benchmark for all industries. Furthermore, what is a
big capital today may become small in years to come (Aremu and Adeyemi, 2010).
Consequently, there are as many definitions of SSEs as there are scholars and institutions.
Makhbul (2011) stated that small scale industries (SSIs), small scale businesses (SSBs),
and small scale enterprises (SSEs) are some of the terms that are used interchangeably to
describe small and medium scale enterprises (SMEs). The author further stated that SSEs
or SMEs are very heterogeneous group because these enterprises embrace a wider variety
and diverse forms ranging from tailors and garments, textiles, furniture producers, wood
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cutting mills and bakeries. Others include villages, handicrafts centers and weavers, small
machine shops, restaurants to computer software firms using sophistication and skills.
The National Council on Industry (NCI, 2001) categorized SMEs into three major
concepts of industrial enterprises in Nigeria: Micro/Cottage Industry, Small-Scale
Industry and Medium-Scale Industry. Micro/Cottage Industry is described as an industry
with a total capital of not more than N1.5 million, including working capital but
excluding cost of land, and/ or a workforce of not more than 10 workers. Small-Scale
Industry in the other hand is described as an industry with a total capital of over
N1.5million, but not more than N50 million including working capital but excluding cost
of land and/or a workforce of 11- 100 workers. The term Medium-Scale Industry refers to
as an industry with a total capital of over N50 million, but not more than N200 million,
including cost of land, and/or, a workforce of 101-300 workers.
The Central Bank of Nigeria (2008) defined small-scale enterprises as those
businesses whose annual turnover was not more than N500, 000. The Federal
Government of Nigeria (2008) defined small-scale enterprises for purposes of
commercial bank loans as those with an annual turnover not exceeding N500, 000, and
for Merchant Bank Loans, with capital investments not exceeding 2 million naira
(excluding cost of land) or a maximum of N 5 million. The National Economic
Reconstruction Fund, NERFUND (2003) put the ceiling for small-scale industries at N10
million. While the Central Bank of Nigeria (2004) agreed with the definition given by
Small and Medium Industries and Equity Investment Scheme, SMIEIS (2004) on SSEs as
any enterprise with a maximum asset base of less than N50 million (equivalent of about
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$0.43 million) excluding land and working capital, and with the number of staff
employed not less than 10 (otherwise will be a cottage or micro-enterprise).
In this study, Small-Scale Enterprises (SSEs) consist of all business organizations
whose total capital is not more than N10 million including the cost of land and workforce
capacity between 1 to 20. This definition is also in line with that of National Council on
Industries, NCI (2001), which categorized SSEs as small and usually managed as sole
proprietor with self-employment as a key element of such enterprises. SSEs are generally
considered to be non-subsidiary, independent firms which employ less than a given
number of employees. Small firms are mostly considered to be firms with fewer than 20
employees (Bello, 2007).
The National Development Plans in Nigeria for four years since independence had
laid emphasis on industrialization through the encouragement of local manufacturing
industries (Ayozie, 2008). As part of the proactive strategies, the federal government of
Nigeria through the Ministry of Industry, Trade and Investment has flagged off the
University Entrepreneurship Development Programme (UNEDEP) to promote self-
employment among youths from institutions of higher learning. Similarly, recently the
federal government established the Youth Enterprise With Innovation in Nigeria
(YouWiN) as a way of encouraging young entrepreneurs (UNEDEP). This was in
recognition of the leading role which the local sector is expected to play in the
industrialization strategy of the government as well as the overall development of the
economy. Small-scale enterprises (SSEs) and Medium scale enterprise (MEs) form the
core of majority of the world’s economies.
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A study carried out by the Federal Office of Statistics in 2003 showed that in
Nigeria, SSEs (SME) make up 87% of the economy. Small Scale Enterprises in Nigeria
are the most important enterprises in the economy due to the fact that when all the
individual effects are aggregated, the result will surpass that of the larger companies.
Small-scale enterprises (SSEs) have continued to serve the world economy as a catalyst
for employment generation, national growth, poverty reduction and economic
development. According to Osuala (2004), SSEs both in the formal and informal sectors
employ over 60% of the labour force in Nigeria vis-à-vis Plateau State.
Similarly, Plateau State is characterized by a large number of informal, small and
medium businesses and formal modern firms. The industrial activities are made possible
with the availability of tin, columbite, fertile soil, tourism (Ministry of Commerce and
Industry, Plateau State). However, in term of output, the small scale enterprises (SSEs)
and medium scale enterprises (SMEs) in 2009 accounted for 12% and 9% respectively as
compared to 10% and 8% in 2007 (Plateau State Directory, 2010). This statistics shows
that SSEs in Plateau State are in a transitional state. The small scale enterprises in Plateau
State are based more in the production of consumer goods particularly in food
production. Despite the increasing importance attached to small-scale enterprises, a lot of
SSEs still find it very difficult to effectively play their role because of the high mortality
rate.
In Nigeria vis-à-vis Plateau State, there are a lot of problems that bedevil and stunt
the growth of SSEs. According to Organization for Economic Co-operation and
Development (OECD, 2012) SSEs in Nigeria vis-à-vis Plateau state are suffering from
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the consequences of policy inconsistency, insecurity, poor access to finance, poor
infrastructure, insufficient know-how and low level of technology, and so many others.
Therefore, finance is a major tool that can affect the growth and development of any
business organization. For the purpose of this study financial impediment simply refers to
every delay, hindrance, action, obstacle or retardation; any structure that makes progress
difficult to SSEs.
Every business organization, small, medium, and large operates within the
framework of financial fundamental concept, and the basic financial management
principle is financial decision: the principle (finance) is the determinant of when, where
and how to acquire funds to finance the business (Fabayo, 2009). According to Osuala
(2004), the dearth of adequate source of finance has been a major impediment that
inhibits the growth of SSEs in Nigeria vis-à-vis Plateau State. Similarly, according to
Alade (2004) collateral based financing has become increasingly difficult for SSEs,
whether as existing businesses, in their expansion states or as start-ups. The author noted
that the key components of financial impediment are weak government policies, poor
management practices and low credit facilities.
One of the financial impediments that may have been confronting SSEs in Nigeria
vis-à-vis Plateau State is not knowing how to raise funds or capital for their business.
The various ways of raising funds opportunities are not widely known to these SSEs.
According to The Nigeria Investment Promotion Commission, (NIPC, 2010) SSEs lack
knowledge of finance supply, sources and available banking and credit services. NIPC
noted that this stifles the take-off and growth of SSEs in Nigeria. Another area of
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emphasis is in management. In addition, according to Plateau State Ministry of
Commerce and Industries in 2005, banks in the state are reluctant to lend SSEs due to
their inability to meet the bank’s lending requirements such as lack of management and
entrepreneurial skills, poor and unreliable financial records among others (Abor, 2008).
Similarly, the small-scale enterprises (SSEs) financial management practice of
some of the SSEs is characterized by the highly personalized preferences and prejudices.
The attitude of some entrepreneurs to loans and that of their workers to work is
counterproductive. Many entrepreneurs (managements) when offered with credit
facilities believe that it is their share of the “national cake” (Ireghah, 2011). The author
also noted that most small-scale enterprises managers and accountants do not believe that
qualification and managerial ability are important for business growth and survival, and
so have neglected these factors as basic for the development and growth of their
businesses.
Furthermore, government is meant to act as a business regulator with the overall
aim of helping to maintain a climate of confidence and stimulate the activities of the
enterprises, so that they can have the respect for the rule of competition (Wahab and
Ijaiya, 2010). But on the contrary, government policies seem to have constituted a serious
problem to the growth of SSEs. Weak government financial regulatory policies take
different forms: regulations governing the starting of business, access to funds, interest
rates, taxation and foreign trade (Kasseeah, 2012). In many African countries vis-à-vis
Nigeria, business laws are archaic, too complex and too general in relation to SMEs, most
of whom tend to be ill informed about these laws. Government regulations on businesses
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distort the operation of the free market enterprises system and impede competition; many
of the regulations require the same level of compliance for both small and large
enterprises.
From all the problems mentioned it is obvious that the government have not been
able to realign their policy frameworks to combat the deepening crises of development
that has plagued SSEs. Therefore, since business ideas cannot survive without proper
financing, there is the need to intensify efforts to promote business support services for
SSEs with a view to upgrading them to sound and sustainable business entities.
Statement of the Problem
Small scale enterprises (SSEs) and medium enterprises (MEs) form the core of
majority of the world’s economies. SMEs contribute to improved living standards, bring
about substantial local capital formation and achieve high level of productivity and
capability. The sector has also been identified as vehicles for employment generation and
providing opportunities for entrepreneurial sourcing, training, development and
empowerment. The Federal Office of Statistics of Nigeria stated that small-scale
enterprises make up 87% of the economy. As part of the proactive strategies, the federal
government of Nigeria through the Ministry of Industry, Trade and Investment has
flagged off the University Entrepreneurship Development Programme (UNEDEP) to
promote self-employment among youths from institutions of higher learning. Similarly,
the federal government established the Youth Enterprise With Innovation in Nigeria
(YouWiN) as a way of encouraging young entrepreneurs, to stem youth restiveness and
their involvement in social vices as well as to engage them in productive economic
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activities. Furthermore, the Central Bank of Nigeria (CBN) recently launched a N220
billion Micro Small and Medium Enterprises (MSME) Development fund. The aim was
to provide funds at a cheap cost and longer terms compared to what is obtain at
commercial banks.
Despite the increasing importance attached to small-scale enterprises, a lot of
SSEs still find it very difficult to effectively play their role because of the high mortality
rate of these small firms especially in Plateau State. According to the Small and Medium
Enterprises Development Agency of Nigeria (SMEDAN, 2013), 80% of small businesses
die before their 5th anniversary. Some of these constraints have been identified to
include high interest rate, banks’ apathy to financing SMEs because of the perceived risks
in the system, multiple taxation, poor accounting system, weak management system,
marketing, economic, planning and finance.
It is often conceived that faster economic growth will not be possible without
finance. Realizing that finance is the propeller that key the engine for the running of any
business organization, this study is undertaken to identify the financial impediments
(weak government financial regulatory policies, low credit facilities, mismanagement and
poor financial practices) to the sustainable growth and development of small scale
enterprises operating in Plateau State and proffer strategies for ameliorating these
impediments.
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Purpose of the Study
The general purpose of this study was to determine the financial impediments to
sustainable growth and development of Small-Scale Enterprises operating in Plateau
State. Specifically, the study will sought to:
1. determine the extent to which level of inaccessibility of credit facility impede the
growth and development of small scale enterprises in Plateau State.
2. determine the extent to which government financial regulatory policies impede the
growth and development of small scale enterprises in Plateau State.
3. determine the extent to which poor financial management practices impede the
growth and development of small scale enterprises in Plateau State.
4. determine strategies for ameliorating the financial impediments to sustainable
growth and development of Small-Scale Enterprises operating in Plateau State.
Significance of the Study
The findings of this study would be of tremendous benefits to owners
(entrepreneurs), Managers and Accountants of small scale enterprises (SSEs) and
medium scale enterprise (SMEs) operating in Plateau State, youths, other researchers and
the governments (policy makers) of Plateau State.
The result of this work would provide useful information to existing and potential
entrepreneurs (business owners) on the possible ways of sourcing funds to business
organization at a low interest, thereby overcoming their financial challenges and bringing
about growth and development. Owners of small scale businesses will get to understand
some of the mismanagement practices that are counterproductive to the business.
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Youths in the state can easily become aware of possible sources of capital to start
or expand their businesses, because the study will expose possible ways of accessing
funds from both government and non-governmental agencies. Findings from this study
will enable the youths to be more focused, self employed and as well reduce the rate of
crime and unemployment in the area.
The Management of small scale enterprises will benefit by addressing financial
impediments such as source of credit facilities and policies that often hinder the growth
of their businesses. This will enable the management to boost their financial strength.
Managers and accountants and accountants of SSEs can easily access valuable
information, such as accurate and timely information on market opportunity, technology,
business practices and regulations and also assist them to take a full advantage of these.
Policy makers of Plateau State will become aware of the financial inhibitors such
as insecurity, weak policies, inadequate collateral and non-timely information to small
scale businesses. It will enable policy makers in formulating measures and policies as
follows: Encouraging the commercial financial institutions to participate in SSEs
financing and providing incentives and rewards to the commercial financial institutions
for their excellent performances; Providing SSEs with human-resource capacity building
with financing to help them to develop financial tools for their enterprises; Developing
the risk assessment and risk based regulatory framework for the SMEs financing;
Establishing a special financial institution for SSEs which will provide fund and venture
capital for the start-up business and improving liquidity for SSEs to improve product
quality and access to new technology.
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Finally, the study will serve as source of literature to both students and lecturers,
thereby adding to the world of knowledge. Future researchers can carry out their study in
similar area based on the recommendations of this work.
Research Questions
In the course of this study, the following research questions will be answered;
1. To what extent does the level of accessibility of credit facility impede the growth
and development of small scale enterprises operating in Plateau State?
2. To what extent do government financial regulatory policies impede the growth and
development of small scale enterprises operating in Plateau State?
3. To what extent does poor financial management practice impede the growth and
development of small scale enterprises in Plateau State?
4. What are the strategies for ameliorating the financial impediments of small scale
enterprises operating in Plateau State?
Hypotheses:
The following null hypotheses were formulated for the study and will be tested at
0.05 level of significance:
Ho1: There is no significant difference in the mean responses of proprietors
and employees on the extent to which accessibility of credit facility impede the
financing of small scale enterprises in Plateau State?
Ho2: There is no significant difference in the mean responses of proprietors
and employees on the extent to which government financial regulatory policies
impede the financing of small scale enterprises in Plateau State
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Ho3: There is no significant difference in the mean responses of proprietors
and employees on the extent to which insecurity of life and property impede
financing of small scale enterprises in Plateau State
Ho4: There is no significant difference in the mean responses of proprietors and
employees on the strategies for ameliorating the financial impediments of small
scale enterprises operating in Plateau State
Delimitation of the Study
The study is delimited to small scale enterprises (SSEs) operating in the Central
Senatorial zone of Plateau State. The zone comprises of five local government areas
namely; Pankshin, Mangu, Bokkos, Kangke and Kannam. The study was be based on the
opinions of entrepreneurs and employees of the small scale enterprises operating within
this zone in the state. Finally, medium and large business enterprises operating in the
central senatorial zone were not involved in the study.
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CHAPTER TWO
REVIEW OF RELATED LITERATURE
The related literature for this study was reviewed under the following sub- headings:
1. Conceptual Framework
• Meaning and Roles of Small-Scale Enterprises
• Financial Impediments Encountered by Small-Scale Enterprises
• Fund Raising by Small-Scale Enterprises and Credit facilities available to
Small-Scale Enterprises
• Government Financial regulatory Policies.
• Financial Management Practices of Small-Scale Enterprises
• Strategies for Ameliorating the Financial Impediments of Small-Scale
Enterprises.
2. Theoretical Framework
• The Life Cycle Theory.
• Theory of Growth and Size of Firm
3. Related Empirical Studies
4. Summary of Reviewed Literature
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Conceptual Framework
A concept is a mental representation, which the brain uses to denote a class of
things in the world. According to Eboh (2009), a concept is an idea, thought or
devolution of abstract system of thoughts, by which science investigates, interprets, and
understands particular segment of reality of phenomenon. Concepts are mental
representations that allow the researcher to draw appropriate inferences about the type of
entities we encounter in our everyday lives.
Conceptual framework is a tool researchers use to guide their inquiry; it is a set of
ideas used to structure the research, a sort of map that may include the research question,
the literature review, methods and data analysis. According to sociologists Haralambos
and Holborn (2008), a conceptual framework enables the researcher to find links between
the existing literature and his own research goals. Conceptual frameworks, according to
educational researcher Smyth (2004), are structured from a set of broad ideas and theories
that help a researcher to properly identify the problem they are looking at, frame their
questions and find suitable literature. The framework spells out the context and forms of
relationship or interactions between phenomena, as well as the process or flow associated
with the interactions. Through the conceptual framework, the researcher can show the
relationships of the different constructs that he wants to investigate.
Meaning of Small-Scale Enterprises
Over the years, Nigeria government has seen small-scale enterprises (SSEs) as
the cradle for industrialization and a prerequisite for rapid economic growth and self-
reliance. Despite the important roles played by SSEs in Nigeria, there is no generally
XXVII
agreed or universally applicable definition. Numerous factors related to a given socio-
economic environment, tend to influence the definition of SSEs (Aremu, 2010). The
definition of small scale industry varies with the culture and peculiar circumstances of the
person attempting the definition. Studies on small scale enterprises identified more than
fifty different definitions in seventy-five countries (Agbasi, 2010). In Britain for instance,
the standard definition of small scale enterprises that it is a business with an annual
turnover of two million pounds sterling or less, with less than two hundred paid
employees. In United States, the size of a business is measured using several criteria
including the number of employees, total sales volume and total assets. Any business that
employs more than one hundred people or grosses less than one million dollars is
considered small in United States, whereas, in Nigeria, this definition perfectly fit into
medium scale business. Similarly, in Japan small businesses are described as “Ocusho
Kigyo” which refers to small and medium firms that may secure capital up to one
hundred million Japanese yen and less than 299 employees in manufacturing (Fatoki, and
Adeyemi, 2010). This therefore makes it relatively difficult to attempt to define small
scale enterprise differently from medium scale enterprise.
In Nigeria, a small scale business is understood to be an independent business
undertaking where operational, major decision(s) making and administrative management
are in the hands of one or partners of about two (2) persons who have a total assets less
than two million naira (N2 million) and a relatively small share of the market and does
not have more than 100 employees (Osuala, 2004). Most activities in Nigeria that can be
categorized as SSEs are small and usually managed as sole a proprietor with self-
XXVIII
employment as a key element of such enterprises (IADB, 2011). The Monetary Policy
Circular No. 22 of the Central Bank of Nigeria (2004) defined small-scale enterprises as
enterprises whose annual turnover was not more than N500, 000. The Federal
Government of Nigeria (2006) also defined small-scale enterprises for purposes of
commercial bank loans as those with an annual turnover not exceeding N500, 000, and
for Merchant Bank Loans, those enterprises with capital investments not exceeding 2
million naira (excluding cost of land) or a maximum of N 5 million.
In this study, Small-Scale Enterprises (SSEs) consist of all business organizations
whose total capital employed is not more than N5 million including the cost of land and
workforce capacity between 1-20. This definition is essential because it laid down
parameters under which a business may take advantage of the different incentives created
by government for the growth of the SSEs sector. Some of these incentives according to
Kauffman (2005) include export incentives, technical assistance and tax relief. The
definition also gives room for more small scale business operators to participate in the
national economic development prospect and also stressed the abilities of SSEs in high
employment generation capacity.
Role of Small-Scale Enterprises
The government of Nigeria have made several policies/decisions to switch from
capital intensive and large scale industrial projects which was based on the philosophy of
import development to Small and Medium Scale Enterprises which have better prospects
for developing domestic economy, thereby generating the required goods and services
that will propel the economy of Nigeria towards development.
XXIX
To better understand the role of SSEs, there is the need to analyze the economic
history of both emerging market and industrialized countries like China, Korea, India,
Turkey, Italy, Holland, UK etc. The Italian fashion industry was virtually built on the
backbone of "Mum and Pop" cottage industries (Ojo, 2009). China has made a name for
itself as the world's "work-house" just on the basis of low-tech manufacturing activities.
Simply put, the earliest manifestations of SSEs in advanced countries were cottage
industries that later transformed into industrial complexes and high tech factories: In
China SSEs employ over 50% of the work force while In US, SSEs account for over
50%.
Small scale enterprises in Plateau State is seen as the backbone to
industrialization and are a key source of economic growth, dynamism and flexibility. In a
Plateau State Handbook (2006), the government has realized that the objective of
transforming the state into a major industrialized economy depends critically on the
private sector performing the leading role in investment management through the growth
in SSEs. A study conducted by the Federal Office of Statistics (20012) showed that 97%
of all businesses in Nigeria employ less than 100 employees, implying that 97% of all
businesses in Nigeria are to use the umbrella term, "small businesses". The SSEs sector
provides, on average, 50% of Nigerians’ employment, and 50% of the countries’
industrial output (Ayozie, 2008). Indeed, there appears to be an agreement that the
development of SSEs in Plateau State is a right step towards building a vibrant and
diversified economy. Given that a large proportion of Plateau State population relies
either directly or indirectly on small and medium enterprises for survival, Small
XXX
enterprises then serves as a key source of new jobs, innovation, economic dynamism and
greater social growth (Bello, 2007).
Financial Impediments Encountered by Small-Scale Enterprises.
Small scale enterprises (SSEs) have become a popular phrase in Nigeria since this
administration. Hopefully this signifies a growing realization as to the core values that
SSEs can deliver to Nigerians such as Job Creation, Poverty Alleviation and Foreign
Exchange Conservation. Nevertheless, Small scale enterprises in Nigeria have not
performed creditably well due to some challenges. These challenges have led to the slow
growth of SSEs in Nigeria and Africa at large. For example, only about 3 per cent of
SSEs expanded beyond three employees after start-up ((Aremu, 2010)). This situation has
been of great concern to the government, citizenry, operators, practitioners and the
organized private sector groups. According to Alasan and Yakubu (2011), most SSEs
particularly in Nigeria vis-à-vis Plateau State die within their first five years of existence.
Ana (2008) revealed that smaller percentage of these SSEs goes into extinction between
the sixth and tenth year while only about five to ten percent of young companies survive,
thrive and grow to maturity. Many factors may have been identified as the likely reasons
to the premature death of this sub-sector. Alasan and Yakubu (2011), stated that key
among these factors include insufficient capital, lack of focus, inadequate market
research, over-concentration on one or two markets for finished products, lack of
XXXI
succession plan, inexperience, lack of proper book keeping, irregular power supply,
infrastructural inadequacies (water, roads etc). They added that factors such as lack of
proper records, inability to separate business and family or personal finances, lack of
business strategy, inability to distinguish between revenue and profit, inability to procure
the right plant and machinery has drastically stunt the growth of SSEs in Plateau State.
Many authors categorized these problems in different ways. Whiteman (2011)
summarized these problems into two major categories: micro and macro problems. While
the micro problems are those that are inherent in nature and operations of the SSEs, the
macro problems are those that are inherent in the economy thereby making the business
environment difficult for the SSEs to strive or operate. To conclude on the major
constraints facing small-scale enterprises in Nigeria, Obi (1991) pointed out that the issue
of misappropriation of funds and wrong channeling as a major hindrance to the growth of
SSEs in Nigeria. she observed that the plan by the federal and state governments to
provide modest loan to small scale-business operations was a flop, because loans were
granted in most cases on political grounds rather than on commercial or project viability
considerations. She noted that what was supposed to be revolving fund designed to
benefit so many SSEs owners ended up as a bonanza for a few and it become virtually
impossible to recover most of the loans.
But for the purpose of this study the researcher will focus mainly on the financial
impediments (weak government financial policies, low credit facilities, mismanagement
and poor practices) facing small-scale enterprises in Nigeria.
XXXII
Fund Raising by Small-Scale Enterprises
Financial impediments simply refer to every delay, hindrances, actions, obstacles
or progress; any structure that financially makes progress difficult to SSEs. Finance is
regarded as the propeller that keys the engine of business organizations, therefore;
adequate supply of funds becomes necessary to both new and existing businesses
((Aremuetal, 2010). According Levine (2007), the two major ingredients that must be
present before starting a small business are: Entrepreneurial motivation - This is the zeal,
drive that brings about the vision to start up and Finance a business. Of this two, they
noted that finance carries the heavier weight because with the strongest zeal and
determination, there will be frustration without finance. In most cases, the initial finance
investment comes from the promoter's personal savings or, contribution from family and
friends. Most of the times, this is not always sufficient for a good starting. Therefore, the
major difficulty faced by SSEs in Nigeria vis-à-vis Plateau State is that of lack of access
to short and long term finance (World Bank, 2005).
Every business organization, small, medium, and large operates within the
framework of financial fundamental concept, and the basic financial management
principle is financial decision: the principle (finance) is the determinant of when, where
and how to acquire funds to finance the business (Fabayo, 2009). An entrepreneur must
determine business planning stage, the amount of financial resources needed or required
by the business and how and where to raise the funds.
One of the financial impediments that may have been confronting SSEs in Nigeria
vis-à-vis Plateau State is not knowing how to raise funds or capital for their business.
XXXIII
The various ways of raising funds opportunities are not widely known to these SSEs. One
of the major problems identified as being responsible for the slow disbursement of the
SMEEIS funds in the first few years of its introduction was lack of awareness among the
intended beneficiaries (World Bank and UNDP, 2009). The organizations noted that this
is partly due to limited exposure to timely business information. SMEEIS added that
SSEs often do not have sufficient information about how and where to raise funds. IFAC
(2010), in their study reported that SSEs need more information and knowledge on fund
raising avenue than that of large businesses, because SSEs are more prone to loan request
refusal. The Nigeria Investment Promotion Commission (NIPC, 2010) noted that SSEs
lack knowledge of finance supply, sources and available banking and credit services.
NIPC noted that this stifles the take-off and growth of SSEs in Nigeria.
Another financial impediment is in the area of sourcing for funds through lease.
Leasing is one of the types of financing that overcome the collateral problems that SSEs
experience in financing (IFAC, 2010). Lease is a contractual relationship between a
leaser and a leassee. It is a medium-term financing that is supposed to be a helpful source
of finance. According to the Chartered Institute of Management Accountants (CIMA,
2000), a lease is a contract between a leaser and a leassee for the hire of a specific asset.
The leaser retains ownership of the assets and conveys the rights to use of the asset to the
leassee for an agreed period of payment specified rental. There are basically two types of
lease arrangements (Beck and Demirgüç-Kunt, 2011). First, the financial lease in which
the leassee pays for use of the equipment with the option of purchasing it at the end of the
lease. The term of the financial lease has duration equal to most of the economic life of
XXXIV
the asset. Second, the operating lease in which the lessee rents the equipment from the
lessor and the lessor retains ownership and claims depreciation on taxes. An operating
lease is a short-term lease that is cancellable by the leassor or leassee upon due notice to
either party. Ovi (2005) explained that in some quarters, leasing has become the single
most important source of external finance for SSEs; hence it does not require down
payments and collaterals.
However, there is low utilization of lease financing by both large industries and
SSEs in developing countries especially Nigeria, with leasing being only less than 2 per
cent as a source of financing for SSEs compared to 15 per cent access to bank loans
(Beck and Demirgüç-Kunt, 2011). They observe that leasing and factoring as a source of
finance for SSEs are underdeveloped in emerging economies. Several studies conducted
in Africa show that the leasing market is underdeveloped and where it exists it tends to
serve large establishments. Ahmed (2001) noted that there is a huge demand for leasing
among SSEs in Nigeria, Tanzania and Uganda but the share of lease financing to
manufacturing industries remain insignificant. The extent to which the manufacturing
industry’s access to lease financing in Africa is not well documented. Nevertheless, the
share of manufacturing in lease financing suggests that SSEs are at a disadvantage. For
instance, in Nigeria only 6 per cent of the values of leased equipment are in the
manufacturing sector and 18.6 per cent in the construction and mining sectors (IFAC,
2010). According to Oboh (2004), leasing accounts for only 1 per cent of outstanding
total credit to the private sector. In Rwanda, only 7 per cent of the assets financed under
leasing are plants and machinery, with vehicles accounting for 65 per cent; and only 123
XXXV
per cent of the leases are in manufacturing and mining sectors. Leasing as presently
operated in Nigeria vis-à-vis Plateau State has become a source financial impediment to
SSEs.
Another similar source of finance to small scale enterprise is hire-purchase. This is
supposed to be a convenient approach to finance enterprises in purchase of plant and
equipment. Nnanna (2001) explained that hire-purchase is a credit sales agreement by
which the owner or supplier of an asset grants the purchaser the authority to take
possession of the assets until the purchaser has satisfied all the terms of the contracts. The
high cost of acquiring equipments through hire-purchase agreement is a financial
impediment to entrepreneur in raising funds (Nnanna, 2001). Hence, the cost of acquiring
equipments in hire-purchase is higher and above the market price. According to Ajayi
(2002), hire-purchase option can only be considered as a last resort in raising funds for
any SSEs operating in Nigeria. He explained that the cost-effectiveness is low, because
the entrepreneur sometimes pays twice the asset value on the long run.
Education has been identified by many scholars as another fund raising-
impediment to SSEs in Nigeria. Obitayo (2002) opined that SSEs with only basic formal
education (First School Leaving Certificate) have more restricted access to institution
finance including the short term working capital to meet fluctuating needs. He noted that
due to their low educational status, the SSEs find it difficult to keep accounting records.
Similarly, Sanda (2006) observed that because most Nigeria SSEs are not highly
educated unlike their counter parts in the developed countries, they face difficulties
XXXVI
gaining access to information on the contemporary approaches of raising funds for
business expansion.
Credit Facilities Available to Small-Scale Enterprises
Credit is not an end in itself; it is a means to an end. The ultimate goal is to affect
productivity (Nigeria Investment Promotion Commission, 2004). The best business ideas
will not survive without proper financing. It is a valid concern for entrepreneurs, as
financing is the lifeblood of a business. Available credits from the banking sector have
been plagued with high interest rates (UNDP, 2007). The organization added that lending
rates to agriculture, manufacturing and the oil and gas sectors have reached about 30 per
cent, with unofficial rates climbing to about 35 percent. Financial experts noted that there
is limited incentive on the part of the banks to lend to the real economy. Banks will rather
maximize the significant spread between low savings and deposit rates and fixed income
yields. SSEs should be recognized as a special group of SMEs that is critical for
industrialization in Africa, and requires specific policies and incentives. A 2001 World
Bank survey on Nigeria's firms showed that although 85 percent of the firms had
relationships with banks, not all of them had access to external credit. The financial
sector in most African economies especially in Nigeria is characterized by very low
levels of financial intermediation and weak capital markets, which cannot effectively
supply the financial resources and other products needed by the private sector (Makhbul,
2011).
In A survey conducted by World Bank in 2010 on Nigeria’s Firms shows that
the larger a firm, the more likely it is to have access to external sources of
XXXVII
credit. Almost 100 percent of firms with more than 250 employees have access to credit
compared to only 52 percent of micro-enterprises (small firms). Interestingly,
over 90 percent of foreign firms have access while less than 60percent of
indigenous firms’ do. According to an economic report from the Central Bank of Nigeria
(2011), the aggregate net credit by banks to the domestic economy fell by 2.7 per cent
and 0.1 per cent in the second and first quarters of the year respectively. In Plateau State,
there has been a steady decline in aggregate credit to the economy, and the private sector
in particular (PSD, 2008).This is largely due to the sustained monetary tightening,
significant rise in government domestic borrowing, and attractive yield of government
bonds and treasury bills. Lack of adequate credit for SSEs traceable to the reluctance of
banks to extend credit to them owing among others to poor documentation of project
proposals as well as inadequate collateral by SSE operators. Weak demand for products
arising from low and dwindling consumer purchasing power and lack of patronage of
locally produced goods by those in authority.
In a study of four African countries: Kenya, Nigeria, Zambia and Zimbabwe, it
was found that the percentage of SSEs receiving bank credit ranged from 8.2 per cent in
Zimbabwe to 24.6 percent in Kenya (Cleark,2005). According to Kasseeah (2012), Small
Scale Enterprises are more constrained in the use of collateral, long-term relationship and
reputation, which eased information problems. Lack of collateral was the most constraint
that SSEs face in accessing lines of credit from the formal financial system (Oh, 1994;
Falkena, 2002).
XXXVIII
Focusing on the issue of collateral in accessing funds, Basil (2005) argues that
lack of collateral is the most important obstacle to SSEs in having access to the formal
financial institutions. In a study of six African countries, Bigsten, & Gebreeyesus (2007)
observed that most lending was collateralized and the value of collateral was typically
high, on average more than twice the value of the loan. However, in most low income
countries, such collateral as land and buildings did not have good titles to real estate and
so in the event of non-payment, there were delays in the exercise of contract rights to
possess collaterals and liquidate the business (Wattanapruttipaisan, 2003). There are
several factors that lead to problems of access to bank loans by the SSEs both from the
perspective of the banks and SSEs. It is argued that SSEs lack corporate governance,
equity and forward-looking vision while the banks are ill-equipped to supervise SSE
loan-portfolio perspective of the banks, they do not have specialized staff and appropriate
financing frameworks for SSEs.
Small and medium-scale business entrepreneurs also source for funds though
Trade Credit. Trade Credit is the most common form of short-term financing. It is an
inter-business credit granted by the suppliers, who allow the buyers to collect goods and
services on credit, based on mutual confidence established between the supplier and the
implied obligation on the buyer, to pay the cost at a later date (Basil,2005). Small-scale
enterprises operators are slow in sourcing finance through trade credit because it provides
only very minimal amount in relation to the capitalization, rehabilitation or working
capital requirement of enterprises. Basil claimed that trade credit as a source of finance to
SSEs has most often hindered the continual operation of the benefiting entrepreneurs.
XXXIX
Another area of emphasis is in management. The small-scale enterprises (SSEs)
management process is characterized by the highly personalized preferences, prejudices,
and attitudes of the firms’ entrepreneur, owner and/or owner-manager (Jennings and
Beaver, 2009).
Accounting procedures are programmatic, more numeral than principle and more
susceptible to change, they often represent alternative way of applying the same
principle. They pointed out that the accounting systems of most SSEs lack standards
hence, no proper assessment of their performances. This creates opportunity for
mismanagement and eventually leads to the death of the business. Izedomi (2011) noted
that, most small-scale enterprises managers and accountants do not believe that
qualification and managerial ability are important for business growth and survival, and
so have neglected these factors as basic for the development and growth of their
businesses. Similarly, Basil (2005) stated that banks are not left alone in the restrictions
to lending to SSEs as the promoters themselves (SSEs) contribute to the inherent
impediments. According to him, most loan application from SSEs are poorly prepared,
documented and presented. The author stated that banks are unable to appraise the loan
application due to poor application and feasibility study. To him, most SSEs are unable to
provide equity contributions which are usually set at between 25 and 30 percent of total
project cost and are therefore, unable to obtain loans. Closely related to this is the issue of
collateral which SSEs are unable to provide.
Another major area of concern to SSEs is in area of marketing. This is because
when correctly used, subjective values may be added to these products. The consumers
XL
will perceive these products as superior to those of competitors and consequently, profit
margins may be increased. But as noted, poor quality, unawareness of competition, poor
promotion, poor distribution, and poor pricing method constitutes to the failure/collapse
major failings of small-scale enterprises in Nigeria vis-à-vis Plateau State (Izedomi,
2011). The author noted that one of the major marketing problem facing small business
enterprises in Nigeria is lack of understanding and the application of marketing concept.
In a study conducted by Izedomi (2011), this was conspicuously exposed. Most Plateau
State, small business owners equate ‘marketing’ to ‘selling’ and this is reflected in their
various dysfunctional business behaviors against customer satisfaction and good business
orientation. Izedomi noted that the adoption and application of marketing concept is one
sure way by which small business enterprises can grow and secure a place in the 21st
business environment. Because marketing skills and knowledge are teachable, they can
only be acquired through training and experience but unfortunately, many small scale
entrepreneurs lack the necessary time and funds to embark on such training.
Another poor financial management practice of SSEs in Plateau State is wrong
attitude of Entrepreneurs and their workers. The attitude of some entrepreneurs to loans
and that of their workers to work is counterproductive. Some entrepreneurs when offered
credit facilities believe that it is their share of the “national cake”, (Ireghah, 2011). These
SSEs therefore mismanage such opportunities. Ireghah added that since salaries or wages
of workers in SSEs are smaller compared to those in large-scale multinationals, some of
these workers engage in eye service and are not productive. According to Oboh (2004),
XLI
SSEs indulged in habit of loan diversion. The author noted that after obtaining loans,
some SSEs utilize the loan for the purpose other than which they were advanced thereby
making loan repayment very difficult if not impossible. In addition to this, is the issue of
loan defaults. Oboh observed that there are few instances where SSEs willingly redeem
loan covenants on due date, even when their businesses are profitable going concerns.
Government Financial Regulatory Policies in Small-Scale Enterprises
The government of any country is a super- body that exerts enormous power in a
given nation. By this implication, it has the capacity and ability to influence almost every
institution under its jurisdiction. Government acts as a business regulator with the overall
aim of helping to maintain a climate of confidence and sanity to stimulate the activities of
the enterprises, so that they can have the respect for the rule of competition (Wahab and
Ijaiya, 2010). Nigeria Governments policies seem to have constituted a serious problem
to the growth of SSEs.
The beginning of harsh government policies toward SSEs in Nigeria can be traced
back to 1982 with the introduction of “stabilization measures” which resulted in import
controls and drastic budget cuts (Rungani and Fatoki, 2010). These, in turn, adversely
affected the subvention to the financial institutions established to provide financial
assistance to the SSEs. For example, in 1983, out of a total of 8,380 applications for loans
received from the SSEs for a total of 46.66 million naira was disbursed. He noted that as
the economic situation deteriorated, the government introduced the Structural Adjustment
Programme (SAP) in 1986. Since the strategy of liberalization and deregulation of
interest rates was implemented, interest rates have continued to increase. The SSEs,
XLII
which prior to the SAP had been granted concessionary rates of interest (particularly for
agricultural and housing loans), had great difficulties obtaining credit of a Stabilization
Securities Account (SSA) whereby the banks were debited with liquidity in their accounts
with the Central Bank.
In many African countries vis-à-vis Nigeria, business laws are archaic, too
complex and too general in relation to SMEs, most of whom tend to be ill informed about
these laws. Laws regarding licensing, taxation, factories zoning, availability of land are
inadequate, punitive or non-existent. Those governing leasing, credit sales and mortgages
negatively affect the financing and acquisition of equipment by SMEs. In the same vein,
Andreas (2005) in an empirical study titled analysis of the impact of government policies
on SSEs/SMEs (entrepreneurial development) in Nigeria vis-à-vis Plateau State, noted
that government policies and programs on SSEs are concentrated in the cities where there
is strict competition between the SSEs products and large scale business. ILO (2000)
stressed that regulatory policies often aimed at developing other sector of the economy
have unintended negative impact on SSEs. For instance, trade liberalization intended to
boost export revenue often stifles local substitutes. According to ILO (2000), this
argument is emphasized in the summary by the organization for Economic Co-operation
and Development (OECD 1997) below:
……. While some regulations may deliberately favour SSEs
(many regulations exclude the smallest businesses), in
general the adverse impact of regulations on SSEs can be
particularly harmful. This is because small-scale
XLIII
enterprises are less equipped to deal with problems arising
from regulations since they have less capacity than larger
firms to navigate through the complexities or regulatory
and bureaucratic network. Small-Scale Enterprises are
more likely to be hampered by regulations because their
strength stems from their flexibility. Some regulations
designed to prevent entry into the market by dynamic small-
scale businesses are particularly detrimental.
Similarly, Whiteman (2011) noted that the frequent changes, and sometimes
conflicting government monetary policies, have also tended to hurt the SSEs. For
example, while the government increased total credit allocation to SSEs from 16 to 20
per cent, the same government removed excess liquidity in the banking industry through
increase in the minimum rediscount rate (MRR).
Unstable government policy has not been helpful to small scale industries. This
has destabilized and indeed sent many small scale industries to early fold ups. Instability
in government policies had caused some establishments to collapse. One of such policies
is that of the 1980s when government specified that cocoa should not be exported in raw,
unprocessed form after a specified deadline. Many industries had to import machineries
only for the government to reverse this policy. He noted that this actually affected so
many in the cocoa industry. Riots, ethnic clashes, etc. have resulted in loss of lives and
properties of entrepreneur. In recent times, Nigeria has had a lot of disturbances like;
XLIV
Kaduna, Kano, Jos religious riots, ethnic clashes in Lagos, Tiv-Jukunv, Warri, Ife-
Modakeke, etc. It becomes very difficult for some SMEs to come out of these
predicaments. Patrick etal (2010) also noted that the frequent changes in government
policies regarding SSEs often undermine its implementation. They noted that there is no
genuine commitment on the part of government, private sector and labour union in the
achievement of the stated objectives. Government regulations on businesses distort the
operation of the free market enterprises system and impede competition; many of the
regulations require the same level of compliance for both small and large enterprises.
Rungani & Fatoki, (2010) opined that monetary and fiscal policies on SMEs discriminate
against their development. These includes: Inadequate fiscal measures, unfavorable
monetary issues like high interest rates, unavailability of credits, poor access to credit,
inadequate financial structures, Interest rates that are sometimes higher than the rate of
returns on investments. This discourages entrepreneurs from borrowing or crippling the
business of those who borrowed but were unable to repay.
Developmental policies weigh in favour of large firms and sometimes foreign –
owned firms leaving SSEs in a distressed and vulnerable position (Ovia, 2004). The
author noted that incidence of multiplicity of regulatory agencies and taxes has always
resulted in high cost of doing business and poor management practices, and low
entrepreneurial skill arising from inadequate educational and technical background of
many SSEs promoters. Similarly, Kasseeah (2012) noted that another impediment is in
government improper implementation of its policies. To him the government inability to
recruit trained manpower and adequate equipment to aid the extension services of SSEs
XLV
tends to affect their performance. According to Obi (1991), the development centers were
not endowed with adequate manpower to carry out technical appraisal of applications for
loans from surging applicants. Another area is misappropriation of funds and wrong
channeling. Obi (1991) pointed out was the plan to provide modest loan to small scale
business operations was a flop, because loans were granted in most cases on political
rather than on commercial or project viability considerations. What was supposed to be
revolving fund designed to benefit so many SMEs owners ended up as a bonanza for a
few and it became virtually impossible to recover most of the loans.
From all the problems mentioned it is obvious that Nigeria have not been able or
willing to realign their policy frameworks to combat the deepening crises of development
that has plagued SSEs during the past two decades.
Ways of Ameliorating the Financial Impediments to the Growth and Development
Small-Scale Enterprises
African countries vis-à-vis Nigeria have recognized that there is the need to
intensify efforts to promote business support services for SSEs with a view to upgrading
them to sound and sustainable business entities. These services should include
accounting, strategic marketing and management, and financial literacy. The SSEs must
enter the formal sector – equity-based registration, maintenance of accounting records,
maintaining auditing accounts, compliance with the tax system, and having clear strategic
focus of the business (World Bank 2010).
Some of the countries in Asia have created special financial institutions to cater
for SSEs needs (Oh, 1994; UNCTA 2001). However, as UNCTAD (2008) noted, such
XLVI
institutions introduced in some countries (such as Colombia, India, Japan, Pakistan,
Republic of Korea and Turkey) have had mixed success with some experiencing
problems of poor loan portfolio performance, declining profitability, and becoming
unsustainable. UNCTAD maintained that the SSE sector is usually segmented by size
categories without paying attention to the nature of economic activities. Most government
policies tends to homogenize challenges and solutions to SMEs as applying to SSEs.
Osuala (2004) opined that SSEs should be recognized as a special group of SMEs that is
critical for industrialization in Nigeria vis-à-vis Plateau State, and should require specific
policies and incentives. Often time, the financing problems of SSEs are usually lumped
together with other SMEs focusing on working-capital needs. In contrast, SSEs in
addition to working capital require long-term financing to support investments in
machinery and equipment.
In order to promote small-scale industrialization in African countries, it is
important for governments to design policies and incentives tailored towards the
promotion of SSEs, distinct from those that apply to SMEs in general (UNIDO, 2007).In
terms of financing needs of SSEs, they require to finance plant and equipment in addition
to working-capital needs. Most of the strategies for the promotion of SSEs access to
finance tend to focus on working-capital needs through short-term credit, ignoring capital
financing needs that are usually medium to long-term (Nichter and Goldmark, 2009). The
financing of SSEs is complex as the needs vary from country to country, thus country
specific solutions are required to address these gaps. They noted that it is also important
that the problem of financing SSEs must be addressed holistically. While increasing the
XLVII
volume of finance is necessary, addressing the technical needs of SSEs and ensuring the
environment is conducive for profitable investments are equally important. Marrand
Tubaro (2013) reveals that one of the most effective ways of building sustainable small
businesses is by creating a linkage between them and commercially viable Microfinance
Institutions (MFIs). To them, Micro finance institutions will be able to finance
creditworthy low-income entrepreneurs, who otherwise would have no access to
mainstream banks.
There is the need to improve the supply-side issues in African economies.
Competitive banking systems should enable the banking sector to engage strategically
with SSEs as the competition becomes stiff in corporate banking (Marr, 2012). As has
been demonstrated in Latin American countries, banking finance to SSEs has become a
strategic segment of commercial banks owing to competition in corporate-and retail-
banking sectors.
Stock markets in Africa are relatively new. Most of the stock exchanges that exist
in Africa were created after 1990. Out of 53 African countries, there are more than 20
active stock markets (UNDP, 2003). According to Marr, (2012) there are 29 stock
exchanges in Africa representing 38 national capitals but only six of these were
established prior to 1990. Some of the oldest stock exchanges include the Egyptian
Exchange established in 1883, Johannesburg Stock Exchange (JSE) founded in 1887,
Casablanca Stock Exchange founded in 1929, the Nairobi Stock Exchange established in
1954, Nigeria Stock Exchange founded in 1960 and the Stock Exchange of Mauritius
XLVIII
(SEM) established in 1988. Although there has been noticeable growth in stock markets
on the continent in terms of numbers and market capitalization, most of these markets are
thin with the number of stocks listed as small as three firms (Hermes and Lensink, 2011).
The awareness and ability of the SSEs to identify the various sources of raising
funds from both internal and external agencies will ameliorate their financial
impediments in their sourcing abilities. Information is the source through which the
SSEs’ awareness is created. Access to relevant time and reliable information on the
various sources of internal and external agencies for funds is very vital for running
successful SSEs. Osuala (2004) explained that planning is critical to the success of any
business. Without planning, a business merely drifts along without any real direction. He
further explained that planning allows the manager to replace ‘I think’ with ‘I know’.
According Osuala, planning help the managers to define planning mission of their
business and create strategies, policies, and procedures. Financial planning is concerned
with the future activities of business financial resource that will ensure the realization of
some goals (Gana, 2001). The more important services are: awareness on government
policies and procedures; it enlightens an operator of SSEs on the general macro-economic
system; enable him to know when and how to benefit from any government assistance in
fund raising from external agencies;
The World Bank has characterized the different types of actions needed to
eliminate these various barriers affecting SSEs as ‘three-pillars’ (World Bank 2000). The
first pillar involves inputs of finance through SSE credit lines, development of micro-
finance banks, or setting up equity capital funds. The second pillar involves actions
XLIX
designed to establish “fair and transparent” tax systems and improvements to the
regulatory framework The third pillar involves the creation of supportive institutions and
support networks. For example, the PHARE programme of technical assistance has been
active in setting up enterprise agencies such as the NEPA in Macedonia and other
agencies and training programmes to support SSE development through the provision of
“real services” in the form of information, advice and training.
The concept of business incubation as a source of financing small and medium
scale business through external agencies is not widely known among Nigerian operators.
Akpokerere (2009) suggested that the various SSEs stakeholders should organize an
integrated action plan which must highlight alternative sources of financing SSEs. The
author stressed that source of fund such as business incubation has made enormous
impact in ameliorating financial impediments in fund generation in South Africa. Some
of the regulations in Nigeria need to be addressed because they are harsh and unfriendly
for business operators.
L
SCHEME
FINANCIAL IMPEDIMENTS TO
SMALL-SCALE ENTERPRISES
GROWTH AND
DEVELOPMENT OF SSEs
Theoretical Framework
LOW ACCESSIBILITY
TO CREDIT FACILITIES
POOR FINANCIAL
MANAGEMENT PRACITCES
WEAK GOV’T FINANCIAL
REGILATORY POLICIES
LOW LEVEL OF EDUCATION
PROPER RECORD
KEEPING IN BUSINESS
RAPID GROWTH AND
DEVELOPMENT OF SSE
TAX HOLIDAY AND SPECIAL COMMERCIAL
COURT FOR SSEs
PROVISION OF SEED FUNDS
AND VENTURE CAPITAL
SPECIAL POLICIES
AND INCENTIVE
STRATEGIES FOR AMELIORATING THE
FINANCIAL IMPEDIMENTS OF SSEs
SLOW GROWTH AND
DEVELOPMENT OF SSEs
LI
A theory is a group of related ideas that provides guidance to a research project or
business endeavor. According to Zima (2007), theoretical framework is a process of
identifying a core set of connectors within a topic and showing how such fit together or
are related in some way to the subject. The theoretical framework is a foundation for the
parameters, or boundaries of a study. The main benefit of a theoretical framework is that
it can help a researcher or writer to determine problem areas, content considerations,
research questions that need to be addressed, and the methodology or way in which the
researcher plans to go about finding an answer to the research question.
Life Cycle Theory
The stage model or life cycle theory of firm was propounded by Mueller 1972, and
was commonly used to describe the progression of the success of firm through growth
phases. This mean that Organisations are born, grow, and decline. Sometimes they
reawaken, sometimes they disappear”. Life-cycle models generally describe the dynamic
within the growth process as “S-shaped”: a slow growth in the early development is
followed by a rapid growth, before the dynamic tends to slow down again.
The stage model or life cycle theory of firm is significant to this study because it
outlines sources of finance typically available at various growth stages of the firm, along
with potential financing problems that may arise at each stage. At the start-up, the
commonly held view is that firms have difficulty accessing external finance. According
to the author the most important and commonly-used sources of finance at this stage are
personal savings of the firm owner, and finance from friends and family members. In
extreme cases, particularly in the face of competition, the firm may not be able to
LII
continue in business. As successful firms survive nascent and start-up phases, and
matures through growth stages, personal funding becomes relatively less important as
investment finance is increasingly sourced from retained profits.
Basically, life-cycle models helps in identifying points on the growth curve where
the risk of crisis or at least a serious slowdown in growth is high. Therefore the life cycle
theory of firm is related to this study because it provides a heuristic framework for the
understanding of Small-Scale enterprise development and justified the reason for the high
mortality rate of small-scale business.
Theory of Growth and Size of Firm
The theory of growth and size of firm was propounded by Garnsey 1998. The
conventional wisdom in economic theory has long held that, due to economies of scale
and scope, the growth of businesses is positively related to their sizes. Large firms were
typically expected to have advantages over small firms and so grow more rapidly. It was
also thought that the small firm sector would play a relatively insignificant role in
regeneration and transition growth. Garnsey observed that, “most studies relating to
periods since 1885 show that small firms grow more quickly than larger firms”.
These empirical studies confirm that in contrast to the orthodox views, small
businesses grow faster than large businesses and this reveals the need for more study in
the area of small-scale businesses. There are several possible explanations of the reasons
for the faster growth of small scale business are; small-businesses are initially uncertain
about their costs, they enter the market at less than minimum efficient scale and over time
grow to reach it.
LIII
A second explanation is that large firms suffer from diseconomies of scale. This is
often linked to the increase in managerial costs as firm size increases and the costs of
coordinating across an expanding span of control encounter limits placed by bounded
rationality. A third explanation was giving by Alnus and Nerlinger (2000) that firms react
asymmetrically to exogenous shocks in the short run. Given short run U-shaped cost
curves, small firms which operate below minimum efficient scale will expand output
when prices rise, while larger firms above minimum efficient scale will not. Conversely,
small businesses will not react to price falls while large firms will reduce output.
The theory of growth and size of firm is significant to this study because it shows
that smaller firms have higher tendency to grow compare to bigger firms. This is because
small businesses do not suffer from diseconomies of scale such as managerial costs and
do not react to price fall as large firms do. The theory will help both government and
private individual to increase the focus on small scale enterprises instead of large
business organizations for meaning growth and development.
Related Empirical Studies
This section dealth with empirical studies done in the area of small- scale
enterprises (SSEs).
As early as 1969, Goldsmith (1969) provided the first cross-country empirical
study documenting the existence of a link between finance and growth. The study used
ex-post facto or retrospective and prospective designs together with descriptive design
and descriptive comparative as well as correlation design. 335 questionnaires were
distributed to respondents and were the ones used for analysis. Further studies followed
LIV
confirming the existence of a strong positive link between the functioning of the financial
system and growth. The study created a vacuum by studying only on the link between
finance and growth of businesses without identifying the major financial constraints
faced by these SSEs. This study will fill the vacuum by identifying the major financial
constraints experienced by SSEs and recommendations on how to alleviate the problems.
In a similarly study conducted by Levine in 2005, finance foster growth as they produce
exact information about possible investment; monitor investment and exert corporate
governance after providing finance; facilitate the trading, diversification, and
management of risk; mobilize and pool savings; and ease the exchange of goods and
services. The work by Levine created a gap by stressing mainly on the importance of
finance to business organization without proffering possible means of acquiring these
finance.
Furthermore, in a research study conducted by Idemobi (2012) on “Factors that
Impede the Sustainability of Small-Scale Enterprises (SSEs) in a Typical Sub-Saharan
Africa context in south-East Nigeria”. The author found out that poor infrastructural
facilities (especially electricity, water and roads), lack of access of formal sources of
credit, high incidence and prevalence of violent crime leading to high operational costs
are the major impediments to sustaining the growth and survival of small and medium
enterprises. Idemobi noted that due to cost of production especially high cost of self-
generated electricity, small and medium enterprises collapse at an alarming rate in
Nigeria. The study recommends that the government should urgently address the issue of
poor infrastructural facilities especially electricity supply and establish an SME stimulus
LV
package to rejuvenate SME’s development and sustainability. The work by Idemobi is
related to this study because it centers on general impediments to sustainable growth of
SSEs but created a vacuum by not adequately addressing the key components of financial
impediments such as weak government financial policies, insecurity and low credit
facilities which this work intend to address.
Nwoke (2008) conducted a research work on ‘Financial Management of Small-
Scale Enterprises in Nigeria. The major purpose of the study was to determine how small
businesses manage their finance. The finding revealed that: lack of appropriate
experience, poor planning, poor financial record-keeping, inflation among others is some
of the factors affecting financial management of SSEs. Based on the findings, the author
recommended that managers and accountants of small firms should strengthen their firms
by raising more capital using the right type of finance for the right assets. Financial
controllers or accountants in small scale businesses should improve in the area of
planning. Nwoke’s work is related to the present work because both of them focus
financial management practice of SSEs. The present study will also close the gap created
by addressing not only the financial management constraint but other financial
constraints such as credit facilities and regulatory policies available for SSEs in Plateau
State.
Ana (2008), carried out a survey research on the “Role of Institutional Policies on
the Growth of SSEs in North-Central Nigeria”. The researcher used a sample population
of 232 and a questionnaire as the instrument for data collection. The study showed that
small-scale enterprises are instrument of economic growth and development in Nigeria.
LVI
The study found that institutional and policy supports to have not been able to address the
challenges sufficiently. The culpability of SSEs could be attributable to the government
and the SSEs entrepreneur themselves. The researcher recommended that government
should ensure that finance should be made available to SSEs to ensure adequate support
and growth.
Alasan and Yakubu (2011) conducted a study on Small and Medium Scale
Enterprises and Economic Growth in Nigeria: Abuja, Nigeria. The study revealed that
lack of access to relative cheap and effective source of finance have been identified as the
major factors hindering their contribution to economic growth. On this basis, the study
assesses specific financing options available to SSEs in Nigeria and contribution with
economic growth via investment level. The Spearman’s Rho correlation test was
employed to determine the relationship between SSEs financing and investment level.
The analysis reported a significant Rho value of 0.643 at 10%. This indicated that there is
significant positive relationship between SSEs financing and economic growth in Nigeria
via investment level. Descriptive statistics were also used to appraisal certain financing
indicators. The study finally, proffers that accessibility to relative low interest rate
finances should be provided to small and medium enterprises in Nigeria in order enhance
economic growth. This study focused mainly the link between growth and SSEs without
looking at the main strength of every business organization which is finance.
In another study relating to finance conducted by Kasseeah in 2010, the study
provided a survey of the recent literature on the financing decisions of small and
medium-sized firms across various countries. The main motivation of the study was that
LVII
small and medium-sized firms differ significantly from large firms, and the latter
represent a much larger share of firms in almost all economies. Kasseeah explore the
various financing sources of small and medium-sized firms and survey the literature to
determine if traditional capital structure theories are able to explain the capital structure
decisions of these firms. The finding of the study indicates that although small firms have
a variety of sources of finance at their disposal they tend to restrict themselves to only a
few, of which internal finance, retained earnings and bank finance dominate. The present
study will focus mainly on the financial impediments SSEs and the ways of ameliorating
these impediments
To conclude on the related empirical studies of SSEs, Aremu (2011) also
conducted a survey research on Establishing Small and Medium Scale Enterprises in
Nigeria: Problems and Prospects. The study buttressed that the role of small and medium
scale enterprises (SMEs) cannot be overemphasized given its relevance’s in resource
mobilization, utilization and overall contribution to gross domestic product (GDP) of a
nation. It serves as the engine of rapid economic growth and development as it respond to
the macro economic problems militating against developing nations like Nigeria. The
study concluded that if policy implementation is enhanced through efficient monitoring
and period review as well as provision of infrastructure, the SMEs, will be empowered
which could serve then as an engine of growth to the Nigeria economy.
All the research studies mentioned in this sub-heading are related to the present
study because they are concerned with the effect and growth of SSEs/SMEs in term of
poor financial management practices or other impediments, such as lack of appropriate
LVIII
experience, poor planning, poor financial record-keeping and inflation. The present
research is therefore, geared towards identifying the financial constraints to the
sustainable small-scale enterprises and recommend possible strategies to these
constraints.
Summary of Reviewed Literature
The reviewed literature revealed that Small scale enterprises in Nigeria vis-à-vis
Plateau State is seen as the backbone to industrialization and a key to economic growth,
dynamism and flexibility. The definition of small scale industry varies with the culture
and peculiar circumstances of the person attempting the definition. In this study, Small-
Scale Enterprises (SSEs) consist of all business organizations whose total capital
employed is not more than N5 million including the cost of land and workforce capacity
between 1-20. Nevertheless, Small scale enterprises in Nigeria have not performed
creditably well due to some challenges.
One of the major financial impediments confronting SSEs in Nigeria as shown by
literature reviewed is knowing how to raise funds or capital for the business. The various
ways of raising funds opportunities are not widely known to SSEs. Another impediment
is the area of poor financial management practice of SSEs. The attitude of some
entrepreneurs to loans and that of their workers to work is counterproductive. Similarly,
government at the federal, state and local levels is responsible for maintaining and to
stimulating the activities of the enterprises through regulations and policies. But in
Nigeria, governments’ policies seem to have constituted a serious problem to the growth
SSEs.
LIX
Two theories were used to support this study: The stage theory of firm described
the progression of the success of firm through growth phases. This means that
Organizations are born, grow, and decline. The theory is significant to this work because
it outlines sources of finance typically available at various growth stages of the firm,
along with potential financing problems that may arise at each stage. The Second is the
theory of growth and size of firm which reveals that in contrast to the orthodox views,
small businesses grow faster than large businesses.
Several empirical studies were reviewed in the area of small- scale enterprises
(SSEs). Goldsmith (1969) conducted a study the existence of a link between finance and
growth. The study created a vacuum by studying only on the link between finance and
growth of businesses without identifying the major financial constraints faced by these
SSEs which the present study is aimed to fill. In a similar research conducted by Idemobi
(2012) on “Factors that Impede the Sustainability of Small-Scale Enterprises (SSEs) in a
Typical Sub-Saharan Africa context in south-East Nigeria”. The author found out that
poor infrastructural facilities (especially electricity, water and roads), lack of access of
formal sources of credit, high incidence and prevalence of violent crime leading to high
operational costs are the major impediments to sustaining the growth and survival of
small and medium enterprises. This study created a vacuum by not adequately addressing
the key components of financial impediments such as weak government financial
policies, mismanagement and poor financial management practices.
Furthermore, mismanagement and poor financial practice of SSEs operators has
been identified as key to financial impediment (Nwoke, 2008). Nwoke finding reveals
LX
that: lack of appropriate experience, poor planning, poor financial record-keeping,
inflation among others are some of the factors militating against the growth of SSEs.
Nwoke’s work is related to the present work because both focuses on financial
management practice of SSEs. The present study will also close the gap created by
Nwoke by addressing not only the financial management constraint but other financial
constraints such as accessibility to credit facilities and regulatory policies available for
SSEs in Plateau State.
Finally, the present work will focused on providing possible strategies of
ameliorating the financial impediments.
CHAPTER THREE
METHODOLOGY
This chapter presents the procedure used in carrying out this study and is
organized under the following sub-heading: design of the study; area of the study;
LXI
population for the study; sample and sampling technique; instrument for data collection;
validation of the instrument; reliability of the instrument; method of data collection and
method of data analysis.
Design of the Study
The study employed a descriptive survey design. A descriptive survey design
focuses on the people, beliefs, opinions, attitudes, motivation and behaviours. Through
descriptive surveys, researchers identify present conditions, prevailing needs as well as
provide information on which to base sound decision (Osuala, 2001). The design is
suitable for this study because the study will ascertain the opinions of the entrepreneurs
of small-scale enterprises in the Nigerian economy.
Area of the Study
This study was carried out in Plateau State. Plateau State is one of the North
central states of Nigeria. The state is made up of seventeen local government areas with
three senatorial zones. The study is to cover only the central senatorial zone in the state
with five local governments namely; Pankshin, Mangu, Bokkos, Kanke, and Kanam local
government. The people of the central zone are predominantly farmers, civil servants and
commercial business men and women. The local governments in the state are
characterized by many shops owned proprietors/proprietress. The choice of the area is
also influenced by the researcher’s familiarity of the area and interest to contribute
meaningfully to the economic growth of the area.
Population for the Study
LXII
The population for the study was 206 made up of 57 and 149 registered
entrepreneurs and employees of small-scale enterprises in the six local governments in
central senatorial zone of Plateau State. The numerical strength of the registered small-
scale enterprises was obtained from the Ministry of Commerce and Industry Directory
(SME Unit) Plateau State. The break-down in the local government in the central zone is
as follows: Pankshin (11 and 38 registered entrepreneurs and employees respectively),
Mangu (15 and 43 registered entrepreneurs and employees respectively), Bokkos (10 and
27 registered entrepreneurs and employees respectively), Kangke (11 and 22 registered
entrepreneurs and employees respectively) and Kannam (10 and 19 registered
entrepreneurs and employees respectively). (Source: Ministry of Commerce and Industry
Directorate (SME Unit) Plateau State).
Sample and Sampling Technique
The population for this study consists of 206 registered proprietors and employees
of small-scale enterprises in Plateau State. Since the total population of the proprietors
and the employees is small and manageable no sampling was carried out.
Instrument for Data Collection
The instrument for data collection was a structured questionnaire titled ‘Financial
Impediments to Small-Scale Enterprises Questionnaire’, (FISSEQ). The questionnaire
items were developed based on the information gathered from the literature reviewed.
The questionnaire was divided into two parts. Part one sought for general information on
the personal data of the respondents; part two comprises of questionnaire items which is
further divided into four sections, A-D.
LXIII
Section A dealt with impediments encountered by Small-Scale Enterprises in obtaining
credit facilities from financial institutions in Plateau State. The Section covers
questionnaire items 1 to 11. The response categories of Very High Extent, High Extent,
Moderate Extent, Low Extent and Very Low Extent were used.
Section B dealt with the extent to which government financial regulatory policies create
financial impediment to Small-Scale Enterprises in Plateau State. The section covered
questionnaire items 12 to 17. The response categories of Very High Extent, High Extent,
Moderate Extent, Low Extent and Very Low Extent are were used.
Section C dealt with the extent to which mismanagement and poor financial practices
impede the financial growth of Small-Scale Enterprises in Plateau State. The section
covered questionnaire items ranging from 18 to 25. The response categories of Very High
Extent, High Extent, Moderate Extent, Low Extent and Very Low Extent were used.
Section D dealt with research question five. This research question sought to ascertain the
strategies for ameliorating the financial impediments of Small-Scale Enterprises. This
section covers questionnaire items 26 to 37. The response categories for section D were
Strongly agree, Agree, Slightly agree, Disagree and Strongly disagree.
Validation of the Instrument
The questionnaire was subjected to face-validation by three experts. Two of the
validates came from the Department of Vocational Teacher Education, University of
Nigeria, Nsukka and one of them is from Vocational Teacher Education, Ahmadu Bello
University, Zaria, in Kaduna State. These experts were requested to validate the
questionnaire items in terms of clarity, wording, appropriateness and adequacy of the
LXIV
items for the study. Their observations and recommendations were effected in drafting
the final copy of the questionnaire.
Reliability of the Instrument
The instrument was subjected to a reliability test to establish the internal
consistency of the questionnaire items. The reliability of the instrument was done using
Cronbach Alpha (α) method. The choice of Cronbach Alpha was based on the fact that
the questionnaire items are of multiple response type and provides for a more stable
measure of homogeneity. The coefficient result yielded 0.86 which was used to establish
the internal consistency of the instrument.
Method of Data Collection
The researcher with the help of three research assistants administered the questionnaire to
the respondents. The questionnaire items were explained to those respondents who cannot
read with understanding. The research assistants were briefed on how to administer the
questionnaire.
Method of Data Analysis
The data collected on the research questions were analyzed using the mean (x) and
standard deviation. Each item in the questionnaire was computed by multiplying the
frequency count by each response category with the corresponding value of the response
category and divided by the number of responded to each question. The hypotheses were
tested using t-test statistic at 0.05 level of significance. The statistical real limit of of
numbers was used to analyze the data as follows:
Response Categories points limit
LXV
Very High Extent 5 4.5 - 5.00
High Extent 4 3.5 - 4.50
Moderate Extent 3 2.5 - 3.50
Low Extent 2 1.5 - 2.50
Very Low Extent 1 0.5 - 1.50
and
Strongly Agreed 5 4.5 – 5.00
Agreed 4 3.5 – 4.49
Fairly Agree d 3 2.5 – 3.49
Disagreed 2 1.5 – 2.49
Strongly Disagreed 1 0.5 – 1.49
Decision Rule
Real limit of numbers was used to take decisions for the research questions 1-3,
while for research question 4, a cut off value of 2.5 and above was accepted as agreed,
while any value below 2.5 was considered disagreed. For the hypotheses, any item with a
P-value (significant (two tailed) greater than 0.05, was accepted as postulated that is there
is no significant difference, but any item with a P-value less than 0.05, was rejected.
CHAPTER FOUR
PRESENTATION AND ANALYSIS OF DATA
LXVI
The data generated for this study was statistically analyzed and presented in this
chapter. In doing this, the research questions and hypotheses were used as basis for the
analysis, interpretation and discussion of results. The findings of the study and discussion
of findings are also presented in this chapter.
Research Question 1
To what extent does the level of accessibility of credit facility impede the growth
and development of small scale enterprises operating in Plateau State?
Table 1
LXVII
Mean ratings on how accessibility of credit facility impedes the growth and development of small scale enterprises operating in Plateau State. N=206 S/NO Items Statement X SD Rmk
1. Financial institutions consider small-scale enterprises as risky and small in size, therefore, show little interest on them.
3.25 .81 ME
2. Reluctance of financial institutions to grant loans to small-scale enterprises because of their high rate of bankruptcy in Plateau State.
3.15 .77 ME
3.
Banks are ill-equipped to supervise small-scale enterprises loan-portfolio which impedes their credit accessibility in Plateau State.
3.11 .80 ME
4.
The value or quantity of trade-credit to enterprises of small-scale businesses depends solely on the supplier’s willingness and not the customer’s demand or request.
3.09 .90 ME
5.
Low credit is associated to banks’ inability to appraise the loan applications of small-scale enterprises due to poor application and feasibility study.
3.09 .90 ME
6. The wrong attitude of some entrepreneur to loans and that of their workers is counterproductive because some entrepreneurs when offered credit facilities; believe that it’s their share of the national cake.
3.00 .73 ME
7. Due to high insecurity of lives and properties, financial institutions, individuals and groups in Plateau State find it difficult to give loan to small-scale enterprises.
2.94 .79 ME
8.
Due to low level of income in Plateau State, banks and individuals are not able to raise adequate credit facilities to small-scale enterprises.
2.96 .85 ME
9. Inability of small-scale enterprises to provide sufficient collateral impedes their financial growth in Plateau State.
3.02 .79 ME
10. Ignorance of how and where to obtain credit facilities impedes small-scale enterprises financial strength.
2.94 .82 ME
11. Mismanagement and low financial planning of small-scale enterprises impedes their success in accessing credit facilities.
2.97 .77 ME
Key: X= Mean, SD= Standard Deviation, ME= Moderate Extent
LXVIII
Table 1 presented the mean ratings of respondents on how inaccessibility of credit facility
impedes the growth and development of small scale enterprises operating in Plateau
State. All 11 items recorded mean ratings ranging from 2.94 to 3.25 indicating moderate
extent, The standard deviation ranges from 0.73 – 0.90 indicating that the respondents
were not far from each other in their opinions.
Hypothesis 1
There is no significant difference in the mean responses of proprietors
and employees on the extent to which accessibility of credit facility impede the financing
of small scale enterprises in Plateau State.
LXIX
Table 2
T-test analysis for comparing data obtained from proprietors and employees on the extent to which accessibility of credit facility impede the financing of small scale enterprises in Plateau State N=206 (Proprietors = 57; Employees = 149 S/NO Items Statement X1 SD1 X2 SD2 df t-cal Sig. Rmk
1. Financial institutions consider small-scale enterprises as risky and small in size, therefore, show little interest on them.
3.19 .81 3.28 .80 204 -.66 .51 NS
2. Reluctance of financial institutions to grant loans to small-scale enterprises because of their high rate of bankruptcy in Plateau State.
3.09 .76 3.17 .77 204 -.73 .47 NS
3.
Banks are ill-equipped to supervise small-scale enterprises loan-portfolio which impedes their credit accessibility in Plateau State.
3.04 .80 3.14 .80 204 -.85 .40 NS
4.
The value or quantity of trade-credit to enterprises of small-scale businesses depends solely on the supplier’s willingness and not the customer’s demand or request.
2.98 .90 3.13 .90 204 -1.03 .30 NS
5.
Low credit is associated to banks’ inability to appraise the loan applications of small-scale enterprises due to poor application and feasibility study.
2.98 .90 3.13 .90 204 -1.03 .30 NS
6. The wrong attitude of some entrepreneur to loans and that of their workers is counterproductive because some entrepreneurs when offered credit facilities; believe that it’s their share of the national cake.
2.91 .76 3.04 .72 204 -1.13 .26 NS
7. Due to high insecurity of lives and properties, financial institutions, individuals and groups in Plateau State find it difficult to give loan to small-scale enterprises.
2.91 .76 2.95 .80 204 -.27 .74 NS
8.
Due to low level of income in Plateau State, banks and individuals are not able to raise adequate credit facilities to small-scale enterprises.
2.98 .81 2.95 .87 204 .22 .83 NS
9. Inability of small-scale enterprises to provide sufficient collateral impedes their
3.02 .83 3.03 .77 204 -.08 .94 NS
LXX
financial growth in Plateau State.
10.
Ignorance of how and where to obtain credit facilities impedes small-scale enterprises financial strength.
2.95 .87 2.93 .79 204 .11 .91 NS
11.
Mismanagement and low financial planning of small-scale enterprises impedes their success in accessing credit facilities.
2.95 .83 2.98 .75 204 -.33 .79 NS
Key: X1= Mean of proprietor; X2 = Mean of employees SD1= Standard Deviation of proprietors; SD2= Standard Deviation of employees; Df= degree of freedom; Sig= probability value (2 tailled); t-cal= calculated values; S= significant; NS= Not Significant
Table 2 presents the summary of t-test analysis on the responses of proprietors
and employees on the extent to which accessibility of credit facility impede the financing
of small scale enterprises in Plateau State. The data revealed that all 11 items had
probability values greater than 0.05 indicating that there is no significant difference in the
mean responses of proprietors and employees on the extent to which accessibility of
credit facility impede the financing of small scale enterprises in Plateau State.
Research Question 2
To what extent do government financial regulatory policies impede the growth and
development of small scale enterprises operating in Plateau State?
LXXI
Table 3
Mean ratings on how government financial regulatory policies impede the growth and development of small scale enterprises operating in Plateau State N=206 S/NO Items Statement X1 SD1 Rks
12. Nigeria Governments’ policies have constituted a serious problem to the growth of SSEs, in Plateau State.
3.01 .80 ME
13. Government’s policies instability regarding business organizations in Plateau State has not been helpful especially to small scale enterprises.
3.07 .77 ME
14. Developmental policies are in favour of large firms and sometimes foreign –owned firms leaving SSEs in a distressed and vulnerable position.
3.10 .77 ME
15. The incidence of multiplicity of regulatory agencies and taxes has always resulted in high cost of doing business and poor management practices for small-scale enterprises in Plateau State.
3.05 .76 ME
16.
There is no genuine commitment on the part of government, private sector and labour union in the achievement of the stated objectives of small-scale enterprises.
3.06 .77 ME
17. There has been complains regarding tedious registration and certification processes in Plateau State i.e various bodies have their requirements and require money and time.
2.90 .77 ME
Key: X= Mean, SD= Standard Deviation, ME= Moderate Extent Table 3 presents the mean ratings of respondents on how government financial regulatory
policies impede the growth and development of small scale enterprises operating in
Plateau State. All 6 items recorded mean ratings ranging from 2.90 to 3.10 indicating
moderate extent, The standard deviation ranges from 0.76 – 0.80 indicating that the
respondents were not far from each other in their opinions
Hypothesis 2
There is no significant difference in the mean responses of proprietors and employees on
the extent to which government financial regulatory policies impede the financing of
small scale enterprises in Plateau State
LXXII
Table 4
T-test analysis for comparing data obtained from proprietors and employees on the extent to which government financial regulatory policies impede the financing of small scale enterprises in Plateau State. N=206 (Proprietors = 57; Employees = 149) S/NO Items Statement X1 SD1 X2 SD2 df t-
cal Sig Remark
12. Nigeria Governments’ policies have constituted a serious problem to the growth of SSEs, in Plateau State.
2.98 .86 3.02 .78 204 -.30 .76 NS
13. Government’s policies instability regarding business organizations in Plateau State has not been helpful especially to small scale enterprises.
3.11 .77 3.06 .77 204 .37 .71 NS
14. Developmental policies are in favour of large firms and sometimes foreign –owned firms leaving SSEs in a distressed and vulnerable position.
3.05 .74 3.12 .78 204 -.57 .57 NS
15.
The incidence of multiplicity of regulatory agencies and taxes has always resulted in high cost of doing business and poor management practices for small-scale enterprises in Plateau State.
2.96 .73 3.10 .78 204 -1.14
.26 NS
16.
There is no genuine commitment on the part of government, private sector and labour union in the achievement of the stated objectives of small-scale enterprises.
2.96 .73 3.10 .78 204 -1.14
.26 NS
17.
There has been complains regarding tedious registration and certification processes in Plateau State i.e various bodies have their requirements and require money and time.
2.86 .77 2.92 .78 204 -.50 .62 NS
Key: X1= Mean of proprietor; X2 = Mean of employees SD1= Standard Deviation of proprietors; SD2= Standard Deviation of employees; Df= degree of freedom; Sig= probability value (2 tailled); t-cal= calculated values; S= significant; NS= Not Significant
Table 4 presents the summary of t-test analysis of the mean responses of
proprietors and employees on the extent to which government financial regulatory
policies impede the financing of small scale enterprises in Plateau State. The data
LXXIII
revealed that all 6 items had probability values greater than 0.05 indicating that there is
no significant difference in the mean responses of proprietors and employees on the
extent to which government financial regulatory policies impede the financing of small
scale enterprises in Plateau State
Research Question 3
To what extent does poor financial management practice impede the growth and
development of small scale enterprises in Plateau State?
LXXIV
Table 5
Mean ratings on how poor financial management practice impedes the growth and development of small scale enterprises in Plateau State. N=206 S/NO Items Statement X1 SD1 Remarks
18. While increasing the volume of finance is necessary, ensuring that the business environment is conducive (secured) for profitable investments are equally much important.
2.92 .83 ME
19. Riots, ethnic and religious clashes have resulted to the inability of most financial institutions to loan out funds to business organizations in Plateau State.
2.88 .90 ME
20.
Crises in Plateau State have resulted to burning of shops, stores, goods etc making many small-scale enterprises windup or close.
2.83 .89 ME
21. The concentration and high spending by the State government on the issue of security has lead to the neglecting of the economic policy.
3.00 .81 ME
22. The high rate of insecurity in Plateau State has created fear and anxiety in operators of SSEs and has reduced the lending ability of the banks to small-scale businesses.
3.03 .82 ME
23. Constant attack by boko-haram in Plateau State could not allow SSEs expand and concentrate on their business because they are made to pay extra-charges for community security alert.
3.09 .86 ME
24
Many friends, relations and associations find it difficult to lend to small businesses due to insecurity of lives and properties.
3.17 .69 ME
25. State of Emergency and Curfew in Plateau State due to crises has affected the financial activities of financial institutions in the State.
3.15 .78 ME
Key: X= Mean, SD= Standard Deviation, ME= Moderate Extent
Table 5 presented the mean ratings of respondents on how poor financial
management practices impede the growth and development of small scale enterprises
operating in Plateau State. All the 8 items recorded mean ratings ranging from 2.83 to
LXXV
3.17 indicating moderate extent, The standard deviation ranges from 0.69 – 0.90
indicating that the respondents were not far from each other in their opinions
Hypothesis 3
There is no significant difference in the mean responses of proprietors and employees on
the extent to which insecurity of life and property impede financing of small scale
enterprises in Plateau State
LXXVI
Table 6
T-test analysis for comparing data obtained from proprietors and employees on the extent to which insecurity of life and property impede financing of small scale enterprises in Plateau State N=206 (Proprietors = 57; Employees = 149) S/NO Items Statement X1 SD1 X2
SD2
df t-cal Sig Rmks
18.
While increasing the volume of finance is necessary, ensuring that the business environment is conducive (secured) for profitable investments are equally much important.
2.88 .80 2.93 .84 204 -.43 .67 NS
19.
Riots, ethnic and religious clashes have resulted to the inability of most financial institutions to loan out funds to business organizations in Plateau State.
2.86 .88 2.89 .91 204 -.19 .85 NS
20.
Crises in Plateau State have resulted to burning of shops, stores, goods etc making many small-scale enterprises windup or close.
2.82 .89 2.83 .89 204 -.01 1.00 NS
21.
The concentration and high spending by the State government on the issue of security has lead to the neglecting of the economic policy.
3.00 .87 3.01 .79 204 -.05 .96 NS
22.
The high rate of insecurity in Plateau State has created fear and anxiety in operators of SSEs and has reduced the lending ability of the banks to small-scale businesses.
3.07 .84 3.02 .81 204 .39 .70 NS
23.
Constant attack by boko-haram in Plateau State could not allow SSEs expand and concentrate on their business because they
3.14 .88 3.07 .86 204 .54 .59 NS
LXXVII
are made to pay extra-charges for community security alert.
24.
Many friends, relations and associations find it difficult to lend to small businesses due to insecurity of lives and properties.
3.19 .77 3.15 .67 204 .36 .72 NS
25.
State of Emergency and Curfew in Plateau State due to crises has affected the financial activities of financial institutions in the State.
3.23 .82 3.11 .76 204 .94 .35 NS
Key: X1= Mean of proprietor; X2 = Mean of employees SD1= Standard Deviation of proprietors; SD2= Standard Deviation of employees; Df= degree of freedom; Sig= probability value (2 tailled); t-cal= calculated values; S= significant; NS= Not Significant
Table 6 presented the summary of t-test analysis on the mean responses of proprietors
and employees on the extent to which insecurity of life and property impedes financing of
small scale enterprises in Plateau State. The data revealed that all 8 items had probability
values greater than 0.05 indicating that there is no significant difference in the mean
responses of proprietors and employees on the extent to which insecurity of life and
property impede financing of small scale enterprises in Plateau State
Research Question 4
What are the strategies for ameliorating the financial impediments of small scale
enterprises operating in Plateau State?
LXXVIII
Table 7
Mean ratings on the ameliorating the financial impediments of small scale enterprises operating in Plateau State. N=206 S/NO Items Statement X1 SD1 Rmk
26.
Small-scale enterprises should be recognized as a special group of SMEs that are critical for industrialization in Plateau State and should require specific policies and incentives.
3.13 .80 A
27.
One of the most effective ways of building sustainable small business enterprises is by creating a linkage between the SSEs and Microfinance Institutions (MFIs) in Plateau State.
3.30 .78 A
28.
The operators of SSEs should evolve new sources of raising funds from both internal and external agencies to ameliorate their financial impediments.
3.05 .78 A
29.
Small-scale enterprises should be duly and legally registered with the appropriate government regulatory agencies in the State.
3.09 .77 A
30.
Tax holiday should be extended to small-scale enterprises in Plateau State by the State government.
3.25 .74 A
31.
Operators of Small-scale enterprises should be mandated to register as private organization or limited liability companies in the State.
3.26 .71 A
32.
Operators of Small-scale enterprises in Plateau State should improve on their record-keeping and auditing strategies.
3.07 .66 A
33.
The government of Plateau State should make proactive policies and programmes on financing of small-scale enterprises.
3.04 .72 A
34.
The government has to set the institutional framework for business, the rules of the game, and to ensure that enterprises receive appropriate incentives to facilitate efficient performance.
3.00 .77 FA
35.
The government should establish a window within the commercial court for handling SSEs.
3.05 .77 A
36.
The government should establish a window within the commercial court for handling SSEs.
3.15 .72 A
37.
The procedures laid by the current Small and Medium Industries Equity Investment Scheme (SMIEIS) in financing potential investments in small and medium scale industries should be made known and accessible.
3.09 .75 A
LXXIX
Key: X= Mean, SD= Standard Deviation, A =Agreed
Table 7 presents the mean ratings of respondents on the strategies for ameliorating
the financial impediments of small scale enterprises operating in Plateau State. All the 12
items recorded mean ratings ranging from 3.00 to 3.26 indicating agreed, The standard
deviation ranges from 0.66 – 0.80 indicating that the respondents were not far from each
other in their opinions
Hypothesis 4
There is no significant difference in the mean responses of proprietors and employees on
the strategies for ameliorating the financial impediments of small scale enterprises
operating in Plateau State.
LXXX
Table 8
T-test analysis for comparing data obtained from proprietors and employees on the strategies for ameliorating the financial impediments of small scale enterprises operating in Plateau State N=206 (Proprietors = 57; Employees = 149) S/N Items Statement X1 SD1 X2 SD2 df t-cal Sig Rmks
26.
Small-scale enterprises should be recognized as a special group of SMEs that are critical for industrialization in Plateau State and should require specific policies and incentives.
3.23 .82 3.09 .79 204 1.13 .26 NS
27.
One of the most effective ways of building sustainable small business enterprises is by creating a linkage between the SSEs and Microfinance Institutions (MFIs) in Plateau State.
3.32 .81 3.30 .78 204 .17 .87 NS
28.
The operators of SSEs should evolve new sources of raising funds from both internal and external agencies to ameliorate their financial impediments.
3.11 .79 3.03 .77 204 .59 .56 NS
29.
Small-scale enterprises should be duly and legally registered with the appropriate government regulatory agencies in the State.
3.11 .77 3.09 .77 204 .15 .88 NS
30.
Tax holiday should be extended to small-scale enterprises in Plateau State by the State government.
3.04 .78 3.34 .70 204 -2.66 .01 S
31.
Operators of Small-scale enterprises should be mandated to register as private organization or limited liability companies in the State.
3.05 .79 3.34 .67 204 -2.65 .01 S
32.
Operators of Small-scale enterprises in Plateau State should improve on their record-keeping and auditing strategies.
2.93 .80 3.13 .60 204 -1.93 .06 NS
33.
The government of Plateau State should make proactive policies and programmes on financing of small-scale enterprises.
2.93 .84 3.08 .67 204 -1.34 .18 NS
34.
The government has to set the institutional framework for business, the rules of the game, and to ensure that enterprises receive appropriate incentives to facilitate efficient performance.
2.91 .87 3.03 .73 382 -1.01 .31 NS
35.
The government should establish a window within the commercial court for handling SSEs.
2.89 .90 3.11 .75 382 -1.85 .07 NS
36.
The government should establish a window within the commercial court for handling SSEs.
3.07 .82 3.17 .68 382 -.93 .35 NS
37.
The procedures laid by the current Small and Medium Industries Equity Investment Scheme (SMIEIS) in financing potential investments in small and medium scale industries should be made known and
3.19 .74 3.05 .70 382 1.19 .23 NS
LXXXI
accessible. Key: X1= Mean of proprietor; X2 = Mean of employees SD1= Standard Deviation of proprietors; SD2= Standard Deviation of employees; Df= degree of freedom; Sig= probability value (2 tailled); t-cal= calculated values; S= significant; NS= Not Significant
Table 8 presents the summary of t-test analysis on the mean responses of
proprietors and employees on the strategies for ameliorating the financial impediments of
small scale enterprises operating in Plateau State. The data revealed that items 30 and 31
had probability values of 0.01and 0.01 respectively, which are less than the significant
value of 0.05 at 204 degree of freedom; meaning that the null hypothesis of no significant
difference was rejected on items 30 and 31. On the other hand, hypothesis of no
significant difference for items 26-29 and 32 - 37 was accepted since the probability
values ranging from 0.70 to 0.88 are greater than the significant level of 0.05. Therefore,
the null hypothesis of no significant difference in the mean responses of proprietors and
employees on the strategies for ameliorating the financial impediments of small scale
enterprises operating in Plateau State was accepted for items 26-29 and 32 - 37.
Findings of the Study
The findings of the study are organized in line with the specific purposes of the study and
hypotheses as follow
• The findings on how inaccessibility of credit facility impedes the growth and
development of small scale enterprises operating in Plateau State revealed that
financial institutions consider small-scale enterprises as risky and small in size,
therefore, show little interest on them; reluctance of financial institutions to grant
loans to small-scale enterprises because of their high rate of bankruptcy in Plateau
LXXXII
State; banks are ill-equipped to supervise small-scale enterprises loan-portfolio
which impedes their credit accessibility in Plateau State; the value or quantity of
trade-credit to enterprises of small-scale businesses depends solely on the
supplier’s willingness and not the customer’s demand or request; and low credit is
associated to banks’ inability to appraise the loan applications of small-scale
enterprises due to poor application and feasibility study. The findings further
revealed that the wrong attitude of some entrepreneur to loans and that of their
workers is counterproductive because some entrepreneurs when offered credit
facilities; believe that it’s their share of the national cake; financial institutions,
individuals and groups in Plateau State find it difficult to give loan to small-scale
enterprises due to high insecurity of lives and properties; due to low level of
income in Plateau State, banks and individuals are not able to raise adequate credit
facilities to small-scale enterprises; inability of small-scale enterprises to provide
sufficient collateral impedes their financial growth in Plateau State; ignorance of
how and where to obtain credit facilities impedes small-scale enterprises financial
strength; and mismanagement and low financial planning of small-scale
enterprises impedes the growth and development of small scale enterprises
operating in Plateau State
• The findings on the summary of t-test analysis on the responses of proprietors and
employees on the extent to which inaccessibility of credit facility impede the
financing of small scale enterprises in Plateau State revealed that all 11 items had
probability values greater than 0.05 indicating that there is no significant
LXXXIII
difference in the mean responses of proprietors and employees on the extent to
which inaccessibility of credit facility impede the financing of small scale
enterprises in Plateau State.
• The findings on how government financial regulatory policies impede the growth
and development of small scale enterprises operating in Plateau State revealed that
Nigeria Governments’ policies have constituted a serious problem to the growth of
SSEs, in Plateau State; Government’s policies instability regarding business
organizations in Plateau State has not been helpful especially to small scale
enterprises; developmental policies are in favour of large firms and sometimes
foreign –owned firms leaving SSEs in a distressed and vulnerable position; the
incidence of multiplicity of regulatory agencies and taxes has always resulted in
high cost of doing business and poor management practices for small-scale
enterprises in Plateau State; no genuine commitment on the part of government,
private sector and labour union in the achievement of the stated objectives of
small-scale enterprises; and regular complains regarding tedious registration and
certification processes in Plateau State are the government financial regulatory
policies that impede the growth and development of small scale enterprises
operating in Plateau State.
• The findings on the summary of t-test analysis of the mean responses of
proprietors and employees on the extent to which government financial regulatory
policies impede the financing of small scale enterprises in Plateau State revealed
that all 6 items had probability values greater than 0.05 indicating that there is no
LXXXIV
significant difference in the mean responses of proprietors and employees on the
extent to which government financial regulatory policies impede the financing of
small scale enterprises in Plateau State, therefore the null hypothesis was upheld.
• The findings on how poor financial management practice impede the growth and
development of small scale enterprises operating in Plateau State showed that
while increasing the volume of finance is necessary, ensuring that the business
environment is conducive (secured) for profitable investments are equally much
important; riots, ethnic and religious clashes have resulted to the inability of most
financial institutions to loan out funds to business organizations in Plateau State;
crises in Plateau State have resulted to burning of shops, stores, goods etc making
many small-scale enterprises windup or close; concentration and high spending by
the State government on the issue of security has lead to the neglecting of the
economic policy; the high rate of insecurity in Plateau State has created fear and
anxiety in operators of SSEs and has reduced the lending ability of the banks to
small-scale businesses; constant attack by boko-haram in Plateau State could not
allow SSEs expand and concentrate on their business because they are made to
pay extra-charges for community security alert; many friends, relations and
associations find it difficult to lend to small businesses due to insecurity of lives
and properties; and State of Emergency and Curfew in Plateau State due to crises
has affected the financial activities of financial institutions in the State.
• The findings on the summary of t-test analysis on the mean responses of
proprietors and employees on the extent to which insecurity of life and property
LXXXV
impedes financing of small scale enterprises in Plateau State. The data revealed
that all 8 items had probability values greater than 0.05 indicating that there is no
significant difference in the mean responses of proprietors and employees on the
extent to which insecurity of life and property impede financing of small scale
enterprises in Plateau State, therefore the null hypothesis of no significant
difference was accepted.
• Findings on the strategies for ameliorating the financial impediments of small
scale enterprises operating in Plateau State revealed that small-scale enterprises
should be recognized as a special group of SMEs that are critical for
industrialization in Plateau State and should require specific policies and
incentives; one of the most effective ways of building sustainable small business
enterprises is by creating a linkage between the SSEs and Microfinance
Institutions (MFIs) in Plateau State; the operators of SSEs should evolve new
sources of raising funds from both internal and external agencies to ameliorate
their financial impediments; Small-scale enterprises should be duly and legally
registered with the appropriate government regulatory agencies in the State;
Operators of Small-scale enterprises should be mandated to register as private
organization or limited liability companies in the State; Operators of Small-scale
enterprises in Plateau State should improve on their record-keeping and auditing
strategies; the government of Plateau State should make proactive policies and
programmes on financing of small-scale enterprises; the government has to set the
institutional framework for business, the rules of the game, and to ensure that
LXXXVI
enterprises receive appropriate incentives to facilitate efficient performance; the
government should establish a window within the commercial court for handling
SSEs; the government should establish a window within the commercial court for
handling SSEs and the procedures laid by the current Small and Medium
Industries Equity Investment Scheme (SMIEIS) in financing potential investments
in small and medium scale industries should be made known and accessible were
found out to be the strategies for ameliorating the financial impediments of small
scale enterprises operating in Plateau State.
• Findings on the summary of t-test analysis on the mean responses of proprietors
and employees on the strategies for ameliorating the financial impediments of
small scale enterprises operating in Plateau State. The data revealed that items 30
and 31 had probability values of 0.01and 0.01 respectively, which are less than the
significant value of 0.05 at 204 degree of freedom; meaning that the null
hypothesis of no significant difference was rejected on items 30 and 31. On the
other hand, hypothesis of no significant difference for items 26-29 and 32 - 37 was
accepted since the probability values ranging from 0.70 to 0.88 are greater than the
significant level of 0.05. Therefore, the null hypothesis of no significant difference
in the mean responses of proprietors and employees on the strategies for
ameliorating the financial impediments of small scale enterprises operating in
Plateau State was accepted for items 26-29 and 32 - 37.
LXXXVII
Discussion of Findings
The discussions of the findings of the study are organized in line with the specific
purposes of the study and hypotheses as follow;
The findings on how inaccessibility of credit facility impedes the growth and
development of small scale enterprises operating in Plateau State revealed that financial
institutions consider small-scale enterprises as risky and small in size, therefore, show
little interest on them; reluctance of financial institutions to grant loans to small-scale
enterprises because of their high rate of bankruptcy in Plateau State; banks are ill-
equipped to supervise small-scale enterprises loan-portfolio which impedes their credit
accessibility in Plateau State; the value or quantity of trade-credit to enterprises of small-
scale businesses depends solely on the supplier’s willingness and not the customer’s
demand or request; and low credit is associated to banks’ inability to appraise the loan
applications of small-scale enterprises due to poor application and feasibility study. The
findings further revealed that the wrong attitude of some entrepreneur to loans and that of
their workers is counterproductive because some entrepreneurs when offered credit
facilities; believe that it’s their share of the national cake; financial institutions,
individuals and groups in Plateau State find it difficult to give loan to small-scale
enterprises due to high insecurity of lives and properties; due to low level of income in
Plateau State, banks and individuals are not able to raise adequate credit facilities to
small-scale enterprises; inability of small-scale enterprises to provide sufficient collateral
impedes their financial growth in Plateau State; ignorance of how and where to obtain
credit facilities impedes small-scale enterprises financial strength; and mismanagement
LXXXVIII
and low financial planning of small-scale enterprises impedes the growth and
development of small scale enterprises operating in Plateau State. Available credits from
the banking sector have been plagued with high interest rates (UNDP, 2007). The
organization added that lending rates to agriculture, manufacturing and the oil and gas
sectors have reached about 30 per cent, with unofficial rates climbing to about 35 percent.
Financial experts noted that there is limited incentive on the part of the banks to lend to
the real economy. Banks will rather maximize the significant spread between low savings
and deposit rates and fixed income yields. SSEs should be recognized as a special group
of SMEs that is critical for industrialization in Africa, and requires specific policies and
incentives. A 2001 World Bank survey on Nigeria's firms showed that although 85
percent of the firms had relationships with banks, not all of them had access to external
credit. The financial sector in most African economies especially in Nigeria is
characterized by very low levels of financial intermediation and weak capital markets,
which cannot effectively supply the financial resources and other products needed by the
private sector (Makhbul, 2011).
In A survey conducted by World Bank in 2010 on Nigeria’s Firms shows that
the larger a firm, the more likely it is to have access to external sources of
credit. Almost 100 percent of firms with more than 250 employees have access to credit
compared to only 52 percent of micro-enterprises (small firms). Interestingly,
over 90 percent of foreign firms have access while less than 60percent of
indigenous firms’ do. According to an economic report from the Central Bank of Nigeria
(2011), the aggregate net credit by banks to the domestic economy fell by 2.7 per cent
LXXXIX
and 0.1 per cent in the second and first quarters of the year respectively. In Plateau State,
there has been a steady decline in aggregate credit to the economy, and the private sector
in particular (PSD, 2008).This is largely due to the sustained monetary tightening,
significant rise in government domestic borrowing, and attractive yield of government
bonds and treasury bills. Lack of adequate credit for SSEs traceable to the reluctance of
banks to extend credit to them owing among others to poor documentation of project
proposals as well as inadequate collateral by SSE operators. Weak demand for products
arising from low and dwindling consumer purchasing power and lack of patronage of
locally produced goods by those in authority. According to Kasseeah (2012), Small Scale
Enterprises are more constrained in the use of collateral, long-term relationship and
reputation, which eased information problems. Lack of collateral was the most constraint
that SSEs face in accessing lines of credit from the formal financial system. There are
several factors that lead to problems of access to bank loans by the SSEs both from the
perspective of the banks and SSEs. It is argued that SSEs lack corporate governance,
equity and forward-looking vision while the banks are ill-equipped to supervise SSE
loan-portfolio perspective of the banks, they do not have specialized staff and appropriate
financing frameworks for SSEs.
The findings on the summary of t-test analysis on the responses of proprietors
and employees on the extent to which inaccessibility of credit facility impede the
financing of small scale enterprises in Plateau State revealed that all 11 items had
probability values greater than 0.05 indicating that there is no significant difference in the
XC
mean responses of proprietors and employees on the extent to which inaccessibility of
credit facility impede the financing of small scale enterprises in Plateau State.
The findings on how government financial regulatory policies impede the growth
and development of small scale enterprises operating in Plateau State revealed that
Nigeria Governments’ policies have constituted a serious problem to the growth of SSEs,
in Plateau State; Government’s policies instability regarding business organizations in
Plateau State has not been helpful especially to small scale enterprises; developmental
policies are in favour of large firms and sometimes foreign –owned firms leaving SSEs in
a distressed and vulnerable position; the incidence of multiplicity of regulatory agencies
and taxes has always resulted in high cost of doing business and poor management
practices for small-scale enterprises in Plateau State; no genuine commitment on the part
of government, private sector and labour union in the achievement of the stated
objectives of small-scale enterprises; and regular complains regarding tedious registration
and certification processes in Plateau State are the government financial regulatory
policies that impede the growth and development of small scale enterprises operating in
Plateau State. The findings are in line with the summary by the organization for
Economic Co-operation and Development (OECD 1997) stated that while some
regulations may deliberately favour SSEs (many regulations exclude the smallest
businesses), in general the adverse impact of regulations on SSEs can be particularly
harmful. This is because small-scale enterprises are less equipped to deal with problems
arising from regulations since they have less capacity than larger firms to navigate
through the complexities or regulatory and bureaucratic network. Small-Scale Enterprises
XCI
are more likely to be hampered by regulations because their strength stems from their
flexibility. Some regulations designed to prevent entry into the market by dynamic small-
scale businesses are particularly detrimental. Similarly, Whiteman (2011) noted that the
frequent changes, and sometimes conflicting government monetary policies, have also
tended to hurt the SSEs. For example, while the government increased total credit
allocation to SSEs from 16 to 20 per cent, the same government removed excess liquidity
in the banking industry through increase in the minimum rediscount rate (MRR).
Unstable government policy has not been helpful to small scale industries. This has
destabilized and indeed sent many small scale industries to early fold ups. Instability in
government policies had caused some establishments to collapse. This findings also
corroborated the assertions of Patrick etal (2010) when they noted that the frequent
changes in government policies regarding SSEs often undermine its implementation.
They noted that there is no genuine commitment on the part of government, private sector
and labour union in the achievement of the stated objectives. Government regulations on
businesses distort the operation of the free market enterprises system and impede
competition; many of the regulations require the same level of compliance for both small
and large enterprises.
The findings on the summary of t-test analysis of the mean responses of
proprietors and employees on the extent to which government financial regulatory
policies impede the financing of small scale enterprises in Plateau State revealed that all 6
items had probability values greater than 0.05 indicating that there is no significant
difference in the mean responses of proprietors and employees on the extent to which
XCII
government financial regulatory policies impede the financing of small scale enterprises
in Plateau State, therefore the null hypothesis was upheld.
The findings on how poor financial management practice impede the growth and
development of small scale enterprises operating in Plateau State showed that while
increasing the volume of finance is necessary, ensuring that the business environment is
conducive (secured) for profitable investments are equally much important; riots, ethnic
and religious clashes have resulted to the inability of most financial institutions to loan
out funds to business organizations in Plateau State; crises in Plateau State have resulted
to burning of shops, stores, goods etc making many small-scale enterprises windup or
close; concentration and high spending by the State government on the issue of security
has lead to the neglecting of the economic policy; the high rate of insecurity in Plateau
State has created fear and anxiety in operators of SSEs and has reduced the lending
ability of the banks to small-scale businesses; constant attack by boko-haram in Plateau
State could not allow SSEs expand and concentrate on their business because they are
made to pay extra-charges for community security alert; many friends, relations and
associations find it difficult to lend to small businesses due to insecurity of lives and
properties; and State of Emergency and Curfew in Plateau State due to crises has affected
the financial activities of financial institutions in the State. The findings are in line with
Ireghah (2011) who stated that the attitude of some entrepreneurs to loans and that of
their workers to work is counterproductive. Some entrepreneurs when offered credit
facilities believe that it is their share of the “national cake”. These SSEs therefore
mismanage such opportunities. Also, the findings support the statement by Oboh (2004)
XCIII
that SSEs indulged in habit of loan diversion. The author noted that after obtaining loans,
some SSEs utilize the loan for the purpose other than which they were advanced thereby
making loan repayment very difficult if not impossible
The findings on the summary of t-test analysis on the mean responses of
proprietors and employees on the extent to which insecurity of life and property impedes
financing of small scale enterprises in Plateau State revealed that all 8 items had
probability values greater than 0.05 indicating that there is no significant difference in the
mean responses of proprietors and employees on the extent to which insecurity of life and
property impede financing of small scale enterprises in Plateau State, therefore the null
hypothesis of no significant difference was accepted.
Findings on the strategies for ameliorating the financial impediments of small
scale enterprises operating in Plateau State revealed that small-scale enterprises should be
recognized as a special group of SMEs that are critical for industrialization in Plateau
State and should require specific policies and incentives; one of the most effective ways
of building sustainable small business enterprises is by creating a linkage between the
SSEs and Microfinance Institutions (MFIs) in Plateau State; the operators of SSEs should
evolve new sources of raising funds from both internal and external agencies to
ameliorate their financial impediments; Small-scale enterprises should be duly and
legally registered with the appropriate government regulatory agencies in the State;
Operators of Small-scale enterprises should be mandated to register as private
organization or limited liability companies in the State; operators of Small-scale
enterprises in Plateau State should improve on their record-keeping and auditing
XCIV
strategies; the government of Plateau State should make proactive policies and
programmes on financing of small-scale enterprises; the government has to set the
institutional framework for business, the rules of the game, and to ensure that enterprises
receive appropriate incentives to facilitate efficient performance; the government should
establish a window within the commercial court for handling SSEs; the government
should establish a window within the commercial court for handling SSEs and the
procedures laid by the current Small and Medium Industries Equity Investment Scheme
(SMIEIS) in financing potential investments in small and medium scale industries should
be made known and accessible were found out to be the strategies for ameliorating the
financial impediments of small scale enterprises operating in Plateau State. The finding is
in agreement with the World Bank, which characterized the different types of actions
needed to eliminate these various barriers affecting SSEs as ‘three-pillars’ (World Bank
2000). The first pillar involves inputs of finance through SSE credit lines, development of
micro-finance banks, or setting up equity capital funds. The second pillar involves actions
designed to establish “fair and transparent” tax systems and improvements to the
regulatory framework The third pillar involves the creation of supportive institutions and
support networks. For example, the PHARE programme of technical assistance has been
active in setting up enterprise agencies
Findings on the summary of t-test analysis on the mean responses of proprietors
and employees on the strategies for ameliorating the financial impediments of small scale
enterprises operating in Plateau State revealed that items 30 and 31 had probability values
of 0.01and 0.01 respectively, which are less than the significant value of 0.05 at 204
XCV
degree of freedom; meaning that the null hypothesis of no significant difference was
rejected on items 30 and 31. On the other hand, hypothesis of no significant difference
for items 26-29 and 32 - 37 was accepted since the probability values ranging from 0.70
to 0.88 are greater than the significant level of 0.05. Therefore, the null hypothesis of no
significant difference in the mean responses of proprietors and employees on the
strategies for ameliorating the financial impediments of small scale enterprises operating
in Plateau State was accepted for items 26-29 and 32 - 37.
XCVI
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
This chapter presents a summary of the problem statement, the procedures used in
the study and draw conclusions based on the findings of the study, as well as presents the
implication of the study and recommendations.
Re-statement of the Problem
Small scale enterprises (SSEs) and medium enterprises (MEs) form the core of
majority of the world’s economies. SMEs contribute to improved living standards, bring
about substantial local capital formation and achieve high level of productivity and
capability. The sector has also been identified as vehicles for employment generation and
providing opportunities for entrepreneurial sourcing, training, development and
empowerment. The Federal Office of Statistics of Nigeria stated that small-scale
enterprises make up 87% of the economy. As part of the proactive strategies, the federal
government of Nigeria through the Ministry of Industry, Trade and Investment has
flagged off the University Entrepreneurship Development Programme (UNEDEP) to
promote self-employment among youths from institutions of higher learning. Similarly,
the federal government established the Youth Enterprise With Innovation in Nigeria
(YouWiN) as a way of encouraging young entrepreneurs, to stem youth restiveness and
their involvement in social vices as well as to engage them in productive economic
activities. Furthermore, the Central Bank of Nigeria (CBN) recently launched a N220
billion Micro Small and Medium Enterprises (MSME) Development fund. The aim was
XCVII
to provide funds at a cheap cost and longer terms compared to what is obtain at
commercial banks.
Despite the increasing importance attached to small-scale enterprises, a lot of
SSEs still find it very difficult to effectively play their role because of the high mortality
rate of these small firms especially in Plateau State. According to the Small and Medium
Enterprises Development Agency of Nigeria (SMEDAN, 2013), 80% of small businesses
die before their 5th anniversary. Some of these constraints have been identified to
include high interest rate, banks’ apathy to financing SMEs because of the perceived risks
in the system, multiple taxation, poor accounting system, weak management system,
marketing, economic, planning and finance. It is often conceived that faster economic
growth will not be possible without finance. Realizing that finance is the propeller that
key the engine for the running of any business organization; therefore, the general
purpose of this study was to determine the financial impediments to sustainable growth
and development of Small-Scale Enterprises operating in Plateau State. Specifically, the
study will seek to:
• determine the extent to which level of accessibility of credit facility impede the
growth and development of small scale enterprises in Plateau State.
• determine the extent to which government financial regulatory policies impede the
growth and development of small scale enterprises in Plateau State.
• determine the extent to which poor financial management practices impede the
growth and development of small scale enterprises in Plateau State.
XCVIII
• determine strategies for ameliorating the financial impediments to sustainable
growth and development of Small-Scale Enterprises operating in Plateau State.
Summary of Procedures Used
The study employed a descriptive survey design and was carried out in Plateau
State. The study covered only the central senatorial zone in the state with six local
governments namely; Pankshin, Mangu, Bokkos, Kanke, and Kanam local government.
The population for the study was 206 made up of 57 and 149 registered entrepreneurs and
employees of small-scale enterprises in the six local governments in central senatorial
zone of Plateau State. Since the total population of the proprietors and the employees are
small and manageable no sampling was carried out.
The instrument for data collection was a structured questionnaire titled ‘Financial
Impediments to Small-Scale Enterprises Questionnaire’, (FISSEQ). The questionnaire
items were developed based on the information gathered from the literature reviewed.
The questionnaire was subjected to face-validation by three experts. Two of the validates
came from the Department of Vocational Teacher Education, University of Nigeria,
Nsukka and one of them is from Vocational Teacher Education, Ahmadu Bello
University, Zaria, in Kaduna State. The reliability of the instrument was done using
Cronbach Alpha (α) method. The coefficient result yielded 0.86 which was used to
establish the internal consistency of the instrument. The researcher with the help of three
research assistants administered the questionnaire to the respondents.
The data collected for the study was analyzed using mean to answer the research
questions and standard deviation to determine the closeness or otherwise of the responses
XCIX
from the mean, while t -test statistic was used to test the null hypothesis of no significant
difference at the probability of 0.05 level of significance at relevant degree of freedom
with the use of Statistical Package for Social Sciences (SPSS). Findings were drawn from
the analysis and based on the findings, conclusion and recommendations were made.
Principal Findings of the Study
The major findings of the study includes the following
• The findings on how inaccessibility of credit facility impedes the growth and
development of small scale enterprises operating in Plateau State revealed that
financial institutions consider small-scale enterprises as risky and small in size,
therefore, show little interest on them; reluctance of financial institutions to grant
loans to small-scale enterprises because of their high rate of bankruptcy in Plateau
State; banks are ill-equipped to supervise small-scale enterprises loan-portfolio
which impedes their credit accessibility in Plateau State; the value or quantity of
trade-credit to enterprises of small-scale businesses depends solely on the
supplier’s willingness and not the customer’s demand or request; and low credit is
associated to banks’ inability to appraise the loan applications of small-scale
enterprises due to poor application and feasibility study. The findings further
revealed that the wrong attitude of some entrepreneur to loans and that of their
workers is counterproductive because some entrepreneurs when offered credit
facilities; believe that it’s their share of the national cake; financial institutions,
individuals and groups in Plateau State find it difficult to give loan to small-scale
enterprises due to high insecurity of lives and properties; due to low level of
C
income in Plateau State, banks and individuals are not able to raise adequate credit
facilities to small-scale enterprises; inability of small-scale enterprises to provide
sufficient collateral impedes their financial growth in Plateau State; ignorance of
how and where to obtain credit facilities impedes small-scale enterprises financial
strength; and mismanagement and low financial planning of small-scale
enterprises impedes the growth and development of small scale enterprises
operating in Plateau State
• The findings on the summary of t-test analysis on the responses of proprietors
and employees on the extent to which inaccessibility of credit facility impede the
financing of small scale enterprises in Plateau State revealed that all 11 items had
probability values greater than 0.05 indicating that there is no significant
difference in the mean responses of proprietors and employees on the extent to
which inaccessibility of credit facility impede the financing of small scale
enterprises in Plateau State.
• The findings on how government financial regulatory policies impede the growth
and development of small scale enterprises operating in Plateau State revealed that
Nigeria Governments’ policies have constituted a serious problem to the growth of
SSEs, in Plateau State; Government’s policies instability regarding business
organizations in Plateau State has not been helpful especially to small scale
enterprises; developmental policies are in favour of large firms and sometimes
foreign –owned firms leaving SSEs in a distressed and vulnerable position; the
incidence of multiplicity of regulatory agencies and taxes has always resulted in
CI
high cost of doing business and poor management practices for small-scale
enterprises in Plateau State; no genuine commitment on the part of government,
private sector and labour union in the achievement of the stated objectives of
small-scale enterprises; and regular complains regarding tedious registration and
certification processes in Plateau State are the government financial regulatory
policies that impede the growth and development of small scale enterprises
operating in Plateau State.
• The findings on the summary of t-test analysis of the mean responses of
proprietors and employees on the extent to which government financial regulatory
policies impede the financing of small scale enterprises in Plateau State revealed
that all 6 items had probability values greater than 0.05 indicating that there is no
significant difference in the mean responses of proprietors and employees on the
extent to which government financial regulatory policies impede the financing of
small scale enterprises in Plateau State, therefore the null hypothesis was upheld.
• The findings on how poor financial management practice impede the growth and
development of small scale enterprises operating in Plateau State showed that
while increasing the volume of finance is necessary, ensuring that the business
environment is conducive (secured) for profitable investments are equally much
important; riots, ethnic and religious clashes have resulted to the inability of most
financial institutions to loan out funds to business organizations in Plateau State;
crises in Plateau State have resulted to burning of shops, stores, goods etc making
many small-scale enterprises windup or close; concentration and high spending by
CII
the State government on the issue of security has lead to the neglecting of the
economic policy; the high rate of insecurity in Plateau State has created fear and
anxiety in operators of SSEs and has reduced the lending ability of the banks to
small-scale businesses; constant attack by boko-haram in Plateau State could not
allow SSEs expand and concentrate on their business because they are made to
pay extra-charges for community security alert; many friends, relations and
associations find it difficult to lend to small businesses due to insecurity of lives
and properties; and State of Emergency and Curfew in Plateau State due to crises
has affected the financial activities of financial institutions in the State.
• The findings on the summary of t-test analysis on the mean responses of
proprietors and employees on the extent to which insecurity of life and property
impedes financing of small scale enterprises in Plateau State. The data revealed
that all 8 items had probability values greater than 0.05 indicating that there is no
significant difference in the mean responses of proprietors and employees on the
extent to which insecurity of life and property impede financing of small scale
enterprises in Plateau State, therefore the null hypothesis of no significant
difference was accepted.
• Findings on the strategies for ameliorating the financial impediments of small
scale enterprises operating in Plateau State revealed that small-scale enterprises
should be recognized as a special group of SMEs that are critical for
industrialization in Plateau State and should require specific policies and
incentives; one of the most effective ways of building sustainable small business
CIII
enterprises is by creating a linkage between the SSEs and Microfinance
Institutions (MFIs) in Plateau State; the operators of SSEs should evolve new
sources of raising funds from both internal and external agencies to ameliorate
their financial impediments; Small-scale enterprises should be duly and legally
registered with the appropriate government regulatory agencies in the State;
Operators of Small-scale enterprises should be mandated to register as private
organization or limited liability companies in the State; Operators of Small-scale
enterprises in Plateau State should improve on their record-keeping and auditing
strategies; the government of Plateau State should make proactive policies and
programmes on financing of small-scale enterprises; the government has to set the
institutional framework for business, the rules of the game, and to ensure that
enterprises receive appropriate incentives to facilitate efficient performance; the
government should establish a window within the commercial court for handling
SSEs; the government should establish a window within the commercial court for
handling SSEs and the procedures laid by the current Small and Medium
Industries Equity Investment Scheme (SMIEIS) in financing potential investments
in small and medium scale industries should be made known and accessible were
found out to be the strategies for ameliorating the financial impediments of small
scale enterprises operating in Plateau State.
• Findings on the summary of t-test analysis on the mean responses of proprietors
and employees on the strategies for ameliorating the financial impediments of
small scale enterprises operating in Plateau State. The data revealed that items 30
CIV
and 31 had probability values of 0.01and 0.01 respectively, which are less than the
significant value of 0.05 at 204 degree of freedom; meaning that the null
hypothesis of no significant difference was rejected on items 30 and 31. On the
other hand, hypothesis of no significant difference for items 26-29 and 32 - 37 was
accepted since the probability values ranging from 0.70 to 0.88 are greater than the
significant level of 0.05. Therefore, the null hypothesis of no significant difference
in the mean responses of proprietors and employees on the strategies for
ameliorating the financial impediments of small scale enterprises operating in
Plateau State was accepted for items 26-29 and 32 - 37
Implications of the Findings
The finding of the study has far reaching implications to the growth of small scale
enterprises in Plateau state as follows:
Findings on how inaccessibility of credit facility impedes the growth and
development of small scale enterprises operating in Plateau State have a far reaching
implications in that financial institutions consider small-scale enterprises as risky and
small in size, therefore, show little interest on them; reluctance of financial institutions to
grant loans to small-scale enterprises because of their high rate of bankruptcy in Plateau
State; banks are ill-equipped to supervise small-scale enterprises loan-portfolio which
impedes their credit accessibility in Plateau State; the value or quantity of trade-credit to
enterprises of small-scale businesses depends solely on the supplier’s willingness and not
the customer’s demand or request; and low credit is associated to banks’ inability to
appraise the loan applications of small-scale enterprises due to poor application and
CV
feasibility study. The findings further revealed that the wrong attitude of some
entrepreneur to loans and that of their workers is counterproductive because some
entrepreneurs when offered credit facilities; believe that it’s their share of the national
cake; financial institutions, individuals and groups in Plateau State find it difficult to give
loan to small-scale enterprises due to high insecurity of lives and properties; due to low
level of income in Plateau State, banks and individuals are not able to raise adequate
credit facilities to small-scale enterprises; inability of small-scale enterprises to provide
sufficient collateral impedes their financial growth in Plateau State; ignorance of how and
where to obtain credit facilities impedes small-scale enterprises financial strength; and
mismanagement and low financial planning of small-scale enterprises impedes the
growth and development of small scale enterprises operating in Plateau State. Until these
issues are addressed, the inaccessibility of credit facility will continue to impede the
growth and development of small scale enterprises operating in Plateau State.
The implication of the findings on government financial regulatory policies has a
far reaching effects on business growth in that some regulations may deliberately favour
SSEs (many regulations exclude the smallest businesses), in general the adverse impact
of regulations on SSEs can be particularly harmful. This is because small-scale
enterprises are less equipped to deal with problems arising from regulations since they
have less capacity than larger firms to navigate through the complexities or regulatory
and bureaucratic network. Small-Scale Enterprises are more likely to be hampered by
regulations because their strength stems from their flexibility. Some regulations designed
to prevent entry into the market by dynamic small-scale businesses are particularly
CVI
detrimental. Similarly, the frequent changes, and sometimes conflicting government
monetary policies, have also tended to hurt the SSEs. For example, while the government
increased total credit allocation to SSEs from 16 to 20 per cent, the same government
removed excess liquidity in the banking industry through increase in the minimum
rediscount rate (MRR). Unstable government policy has not been helpful to small scale
industries. This has destabilized and indeed sent many small scale industries to early fold
ups.
In order to ameliorate the financial impediments of small scale enterprises
operating in Plateau State revealed that small-scale enterprises should be recognized as a
special group of SMEs that are critical for industrialization in Plateau State and should
require specific policies and incentives; one of the most effective ways of building
sustainable small business enterprises is by creating a linkage between the SSEs and
Microfinance Institutions (MFIs) in Plateau State; the operators of SSEs should evolve
new sources of raising funds from both internal and external agencies to ameliorate their
financial impediments; Small-scale enterprises should be duly and legally registered with
the appropriate government regulatory agencies in the State; Operators of Small-scale
enterprises should be mandated to register as private organization or limited liability
companies in the State; operators of Small-scale enterprises in Plateau State should
improve on their record-keeping and auditing strategies; the government of Plateau State
should make proactive policies and programmes on financing of small-scale enterprises;
the government has to set the institutional framework for business, the rules of the game,
and to ensure that enterprises receive appropriate incentives to facilitate efficient
CVII
performance; the government should establish a window within the commercial court for
handling SSEs; the government should establish a window within the commercial court
for handling SSEs and the procedures laid by the current Small and Medium Industries
Equity Investment Scheme (SMIEIS) in financing potential investments in small and
medium scale industries should be made known and accessible were found out to be the
strategies for ameliorating the financial impediments of small scale enterprises operating
in Plateau State.
Conclusion
The purpose of this study is to determine the financial impediment to sustainable
growth of Small Scale Enterprises operating in Plateau State. From the study Data were
collected, analyzed and interpreted. Therefore based on the finding of the study, it was
concluded that the level of accessibility of the credit facilities, government financial
regulatory policies and the poor financial management practice by management of SSEs
to a moderate extend impede the growth and development of Small Scale Enterprises in
Plateau State. It was also concluded among others financial strategies that small scale
enterprises should be recognized as a special group of SMEs that are critical for
industrialization in Plateau State and should require specific policies and incentive that
will create a linkage between the SSEs and Microfinance Institutions (MFIs) in Plateau
State. Furthermore, government is meant to act as a business regulator with the overall
aim of helping to maintain a climate of confidence and stimulate the activities of the
enterprises, so that they can have the respect for the rule of competition.
CVIII
Recommendations
On the basis of the findings, discussions and conclusions of the study, the following
recommendations are made:
• Government and other financial institutions operating in Plateau State should
make credit facilities available to all categories of small scale enterprise and
should ensure adequate monitoring of how the small scale enterprise utilized the
funds
• Government policies should be made to favour and protect small scale enterprises
in order to weird off competitions from larger businesses.
• Registration and certification processes should be made easier for small scale
enterprises in Plateau State in order to encourage more business development in
the State.
• Owners of small scale enterprises should ensure they possessed management
abilities before venturing into such a business to avoid untimely collapse of the
business.
• Small-scale enterprises should be duly and legally registered with the appropriate
government regulatory agencies in the State
• Operators of Small-scale enterprises should be mandated to register as private
organization or limited liability companies in the State; Operators of Small-scale
CIX
enterprises in Plateau State should improve on their record-keeping and auditing
strategies;
• The government of Plateau State should make proactive policies and programmes
on financing of small-scale enterprises; the government has to set the institutional
framework for business, the rules of the game, and to ensure that enterprises
receive appropriate incentives to facilitate efficient performance.
Suggestions for Further Studies
The following suggestions are made for future studies:
• Research should be conducted on the financial management competencies
possessed by managers of small scale enterprises in Nigeria
• Research should be carried out on the challenges and ways of overcoming those financial
challenges confronting small scale enterprises in Nigeria
• Similar study should be conducted in other parts of Nigeria.
CX
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Appendix A
Department of Vocational Teacher Education,
Business Education Section,
University of Nigeria,
Nsukka.
23rd April, 2013.
Dear Respondent,
I am a post graduate student of the above department, currently conducting a
research on the “Financial Impediments to Sustainable Growth and Development of
Small-Scale Enterprises Operating in Plateau State, Nigeria.”.
CXVII
You have been identified as one who could furnish the researcher with the relevant
information to effectively carry out the study. The writer therefore humbly requests your
sincere-opinion in completing the attached questionnaire.
You are assured that the information given by you will be treated in strict
confidentiality and used for the purpose of this study.
Thank you for your anticipated cooperation.
Yours faithfully,
Tawal, Dauda Sale.
QUESTIONNAIRE
Financial Impediments to Sustainable Growth and Development of Small-Scale
Enterprises (FISGDSSE)
SECTION A: GENERAL INFORMATION
Please complete the following questionnaire items by checking (√) in the brackets
as appropriate.
Name of Industry: …………………………………………………………………
Position Occupied: (a) Proprietor ( ) (b) Employee ( )
Academic Level of Respondent:
CXVIII
• First School Leaving Certificate ( )
• WAEC / NECO ( )
• Ordinary National Diploma ( )
• National Certificate in Education ( )
• HND / B.A / B.SC ( )
• Others (Please specify) ……………………………………………………….
SECTION B
To what extent does level of accessibility to credit facilities impede the financing
of small-scale enterprises in Plateau State? Please check (√) to indicate your level of
opinion on the items:
Key: Very High Extent (VHE) - 5
High Extent (HE) - 4
Moderate Extent (ME) - 3
CXIX
Low Extent (LE) - 2
Very Low Extent (SD) - 1
Item Statements VHE 5
HE 4
ME 3
LE 2
VLE 1
1.
Financial institutions consider small-scale enterprises as risky and small in size, therefore, show little interest on them.
2.
Reluctance of financial institutions to grant loans to small-scale enterprises because of their high rate of bankruptcy in Plateau State.
3.
Banks are ill-equipped to supervise small-scale enterprises loan-portfolio which impedes their credit accessibility in Plateau State.
4.
The value or quantity of trade-credit to enterprises of small-scale businesses depends solely on the supplier’s willingness and not the customer’s demand or request.
5.
Low credit is associated to banks’ inability to appraise the loan applications of small-scale enterprises due to poor application and feasibility study.
6.
The wrong attitude of some entrepreneur to loans and that of their workers is counterproductive because some entrepreneurs when offered credit facilities; believe that it’s their share of the national cake.
7.
Due to high insecurity of lives and properties, financial institutions, individuals and groups in Plateau State find it difficult to give loan to small-scale enterprises.
8.
Due to low level of income in Plateau State, banks and individuals are not able to raise adequate credit facilities to small-scale enterprises.
9.
Inability of small-scale enterprises to provide sufficient collateral impedes their financial growth in Plateau State.
10.
Ignorance of how and where to obtain credit facilities impedes small-scale enterprises
CXX
financial strength.
11.
Mismanagement and low financial planning of small-scale enterprises impedes their success in accessing credit facilities.
SECTION C: To what extent do government financial regulatory policies impede the financing of small scale enterprises in Plateau State? Please check (√) to indicate your level of opinion on the items: Item Statements VHE
5
HE 4
ME 3
LE 2
VLE 1
12.
Nigeria Governments’ policies have constituted a serious problem to the growth of SSEs, in Plateau State.
13.
Government’s policies instability regarding business organizations in Plateau State has not been helpful especially to small scale enterprises.
14.
Developmental policies are in favour of large firms and sometimes foreign –owned firms leaving SSEs in a distressed and vulnerable position.
15.
The incidence of multiplicity of regulatory agencies and taxes has always resulted in high cost of doing business and poor management practices for small-scale enterprises in Plateau State.
16.
There is no genuine commitment on the part of government, private sector and labour union in the achievement of the stated objectives of small-scale enterprises.
17.
There has been complains regarding tedious registration and certification processes in Plateau State i.e various bodies have their requirements and require money and time.
CXXI
Section D: To what extent do insecurity of lives and properties impedes affect the growth of small-scale enterprises operating in Plateau State? Please (√) to indicate your level of opinion on the items: Item of Statements VHE
5
HE 4
ME 3
LE 2
VLE 1
18. While increasing the volume of finance is necessary, ensuring that the business environment is conducive (secured) for profitable investments are equally much important.
19. Riots, ethnic and religious clashes have resulted to the inability of most financial institutions to loan out funds to business organizations in Plateau State.
20.
Crises in Plateau State have resulted to burning of shops, stores, goods etc making many small-scale enterprises windup or close.
21. The concentration and high spending by the State government on the issue of security has lead to the neglecting of the economic policy.
CXXII
22. The high rate of insecurity in Plateau State has created fear and anxiety in operators of SSEs and has reduced the lending ability of the banks to small-scale businesses.
23. Constant attack by boko-haram in Plateau State could not allow SSEs expand and concentrate on their business because they are made to pay extra-charges for community security alert.
24.
Many friends, relations and associations find it difficult to lend to small businesses due to insecurity of lives and properties.
25. State of Emergency and Curfew in Plateau State due to crises has affected the financial activities of financial institutions in the State.
Section E: What are the possible strategies for ameliorating the financial impediments of small-scale enterprises operating in Plateau State? Please check (√) to indicate your level of agreement or disagreement on the items: Item of Statements SA
5
A 4
U 3
D 2
SD 1
26.
Small-scale enterprises should be recognized as a special group of SMEs that are critical for industrialization in Plateau State and should require specific policies and incentives.
27.
One of the most effective ways of building sustainable small
CXXIII
business enterprises is by creating a linkage between the SSEs and Microfinance Institutions (MFIs) in Plateau State.
28.
The operators of SSEs should evolve new sources of raising funds from both internal and external agencies to ameliorate their financial impediments.
29.
Small-scale enterprises should be duly and legally registered with the appropriate government regulatory agencies in the State.
30.
Tax holiday should be extended to small-scale enterprises in Plateau State by the State government.
31.
Operators of Small-scale enterprises should be mandated to register as private organization or limited liability companies in the State.
32.
Operators of Small-scale enterprises in Plateau State should improve on their record-keeping and auditing strategies.
33.
The government of Plateau State should make proactive policies and programmes on financing of small-scale enterprises.
34.
The government has to set the institutional framework for business, the rules of the game, and to ensure that enterprises receive appropriate incentives to facilitate efficient performance.
35.
The government should establish a window within the commercial court for
CXXIV
handling SSEs.
36.
The government should establish a window within the commercial court for handling SSEs.
37.
The procedures laid by the current Small and Medium Industries Equity Investment Scheme (SMIEIS) in financing potential investments in small and medium scale industries should be made known and accessible.
CXXV
Appendix B Analyses of Mean and T- Test Statistic
Research Question One
DESCRIPTIVES VARIABLES=Item1 Item2 Item3 Item4 Item5 Item6 Item7 Item8 Item9 Item10 Item11 /STATISTICS=MEAN STDDEV MIN MAX. Descriptives [DataSet2]
Descriptive Statistics
N Minimum Maximum Mean Std.
Deviation
Item1 206 1.00 4.00 3.2524 .80509
Item2 206 1.00 4.00 3.1505 .76616
Item3 206 1.00 4.00 3.1117 .79766
Item4 206 1.00 4.00 3.0874 .90102
Item5 206 1.00 4.00 3.0874 .90102
Item6 206 1.00 4.00 3.0049 .72917
Item7 206 1.00 4.00 2.9417 .78802
Item8 206 1.00 4.00 2.9612 .85451
Item9 206 1.00 4.00 3.0243 .78671
Item10 206 1.00 4.00 2.9369 .81504
Item11 206 1.00 4.00 2.9709 .77089
Valid N
(listwise) 206
CXXVI
Research Question Two One
DESCRIPTIVES VARIABLES=Item12 Item13 Item14 Item15 Item16 Item17 /STATISTICS=MEAN STDDEV MIN MAX. Descriptives
[DataSet2]
Descriptive Statistics
N Minimum Maximum Mean Std.
Deviation
Item12 206 1.00 4.00 3.0097 .79627
Item13 206 1.00 4.00 3.0728 .77115
Item14 206 1.00 4.00 3.1019 .76783
Item15 206 1.00 4.00 3.0485 .75713
Item16 206 1.00 4.00 3.0631 .76566
Item17 206 1.00 4.00 2.9029 .77163
Valid N
(listwise) 206
CXXVII
Research Question Three
DESCRIPTIVES VARIABLES=Item18 Item19 Item20 Item21 Item22 Item23 Item24 Item25 /STATISTICS=MEAN STDDEV MIN MAX. Descriptives
[DataSet2]
Descriptive Statistics
N Minimum Maximum Mean Std.
Deviation
Item18 206 1.00 4.00 2.9175 .83109
Item19 206 1.00 4.00 2.8786 .89977
Item20 206 1.00 4.00 2.8252 .88816
Item21 206 1.00 4.00 3.0049 .81149
Item22 206 1.000 4.000 3.03398 .816782
Item23 206 1.00 4.00 3.0874 .86229
Item24 206 1.00 4.00 3.1650 .69278
Item25 206 1.00 4.00 3.1456 .77658
Valid N
(listwise) 206
Research Question Four
DESCRIPTIVES VARIABLES=Item26 Item27 Item28 Item29 Item30 Item31 Item32 Item33 Item34 Item35 Item36 Item37 /STATISTICS=MEAN STDDEV MIN MAX. Descriptives
CXXVIII
[DataSet2]
Descriptive Statistics
N Minimum Maximum Mean Std.
Deviation
Item26 206 1.00 4.00 3.1262 .79853
Item27 206 1.00 4.00 3.3010 .78193
Item28 206 1.00 4.00 3.0534 .77903
Item29 206 1.00 4.00 3.0922 .76906
Item30 206 1.00 4.00 3.2524 .73542
Item31 206 1.00 4.00 3.2621 .71173
Item32 206 1.00 4.00 3.0728 .66225
Item33 206 1.00 4.00 3.0388 .72479
Item34 206 1.00 4.00 3.0000 .77144
Item35 206 1.00 4.00 3.0534 .76641
Item36 206 1.00 4.00 3.1456 .71783
Item37 206 1.00 4.00 3.0922 .74979
Valid N
(listwise) 206
Hypothesis One T-TEST GROUPS=smallscale enterprise(1 2) /MISSING=ANALYSIS
CXXIX
/VARIABLES=Item1 Item2 Item3 Item4 Item5 Item6 Item7 Item8 Item9 Item10 Item11 /CRITERIA=CI(.95). T-Test [DataSet2]
Group Statistics
smallscaleenterprise N Mean Std.
Deviation
Std. Error
Mean
Item1
Proprietors 57 3.1930 .81149 .10748
Employees 149 3.2752 .80420 .06588
Item2
Proprietors 57 3.0877 .76253 .10100
Employees 149 3.1745 .76874 .06298
Item3
Proprietors 57 3.0351 .80100 .10610
Employees 149 3.1409 .79712 .06530
Item4
Proprietors 57 2.9825 .89625 .11871
Employees 149 3.1275 .90261 .07394
Item5
Proprietors 57 2.9825 .89625 .11871
Employees 149 3.1275 .90261 .07394
Item6
Proprietors 57 2.9123 .76253 .10100
Employees 149 3.0403 .71546 .05861
Item7
Proprietors 57 2.9123 .76253 .10100
Employees 149 2.9530 .79979 .06552
Item8
Proprietors 57 2.9825 .81265 .10764
Employees 149 2.9530 .87252 .07148
Item9
Proprietors 57 3.0175 .83434 .11051
Employees 149 3.0268 .77063 .06313
Item10
Proprietors 57 2.9474 .87466 .11585
Employees 149 2.9329 .79410 .06506
Item11
Proprietors 57 2.9474 .83283 .11031
Employees 149 2.9799 .74860 .06133
CXXX
Independent Samples Test
Levene's
Test for
Equality
of
Variances
t-test for Equality of Means
F Sig. t df Sig.
(2-
tailed
)
Mean
Differenc
e
Std.
Error
Differenc
e
95%
Confidence
Interval of
the
Difference
Lowe
r
Upper
Item1
Equal
variance
s
assumed
.082
.77
5
-
.655
204 .513 -.08219 .12556
-
.3297
5
.1653
8
Equal
variance
s not
assumed
-
.652
100.61
0
.516 -.08219 .12607
-
.3322
9
.1679
1
Item2
Equal
variance
s
assumed
.496
.48
2
-
.726
204 .468 -.08678 .11946
-
.3223
1
.1487
6
Equal
variance
s not
-
.729
102.16
8
.468 -.08678 .11903
-
.3228
6
.1493
1
CXXXI
assumed
Item3
Equal
variance
s
assumed
.350
.55
5
-
.852
204 .395 -.10585 .12431
-
.3509
5
.1392
5
Equal
variance
s not
assumed
-
.850
100.98
5
.398 -.10585 .12458
-
.3529
9
.1412
9
Item4
Equal
variance
s
assumed
1.03
0
.31
1
-
1.03
4
204 .302 -.14506 .14030
-
.4216
9
.1315
7
Equal
variance
s not
assumed
-
1.03
7
102.07
3
.302 -.14506 .13986
-
.4224
6
.1323
4
Item5
Equal
variance
s
assumed
1.03
0
.31
1
-
1.03
4
204 .302 -.14506 .14030
-
.4216
9
.1315
7
Equal
variance
s not
assumed
-
1.03
7
102.07
3
.302 -.14506 .13986
-
.4224
6
.1323
4
Item6
Equal
variance
s
assumed
.460
.49
9
-
1.12
8
204 .261 -.12799 .11349
-
.3517
4
.0957
7
Equal
variance
s not
-
1.09
6
95.953 .276 -.12799 .11677
-
.3597
9
.1038
1
CXXXII
assumed
Item7
Equal
variance
s
assumed
.145
.70
3
-
.331
204 .741 -.04074 .12299
-
.2832
4
.2017
6
Equal
variance
s not
assumed
-
.338
105.95
3
.736 -.04074 .12039
-
.2794
3
.1979
5
Item8
Equal
variance
s
assumed
.751
.38
7
.221 204 .826 .02944 .13339
-
.2335
7
.2924
4
Equal
variance
s not
assumed
.228
108.31
2
.820 .02944 .12921
-
.2266
7
.2855
5
Item9
Equal
variance
s
assumed
.332
.56
5
-
.076
204 .940 -.00930 .12282
-
.2514
7
.2328
6
Equal
variance
s not
assumed
-
.073
94.700 .942 -.00930 .12727
-
.2619
8
.2433
8
Item1
0
Equal
variance
s
assumed
.612
.43
5
.114 204 .909 .01448 .12724
-
.2364
0
.2653
6
Equal
variance
s not
.109 93.372 .913 .01448 .13287
-
.2493
5
.2783
2
CXXXIII
assumed
Item1
1
Equal
variance
s
assumed
1.19
4
.27
6
-
.270
204 .787 -.03250 .12033
-
.2697
5
.2047
6
Equal
variance
s not
assumed
-
.257
92.619 .797 -.03250 .12621
-
.2831
4
.2181
5
Hypothesis Two
T-TEST GROUPS=smallscaleenterprise(1 2) /MISSING=ANALYSIS /VARIABLES=Item12 Item13 Item14 Item15 Item16 Item17 /CRITERIA=CI(.95). T-Test [DataSet2]
Group Statistics
smallscaleenterprise N Mean Std.
Deviation
Std. Error
Mean
Item12
Proprietors 57 2.9825 .85547 .11331
Employees 149 3.0201 .77521 .06351
Item13
Proprietors 57 3.1053 .77192 .10224
Employees 149 3.0604 .77310 .06333
Item14
Proprietors 57 3.0526 .74213 .09830
Employees 149 3.1208 .77906 .06382
CXXXIV
Item15
Proprietors 57 2.9649 .73107 .09683
Employees 149 3.0805 .76685 .06282
Item16
Proprietors 57 2.9649 .73107 .09683
Employees 149 3.1007 .77760 .06370
Item17
Proprietors 57 2.8596 .76622 .10149
Employees 149 2.9195 .77561 .06354
Independent Samples Test
Levene's
Test for
Equality
of
Variances
t-test for Equality of Means
F Sig. t df Sig.
(2-
tailed
)
Mean
Differenc
e
Std.
Error
Differenc
e
95%
Confidence
Interval of
the
Difference
Lowe
r
Upper
Item1
2
Equal
variance
s
assumed
.701
.40
3
-
.303
204 .762 -.03768 .12429
-
.2827
3
.2073
8
Equal
variance
s not
assumed
-
.290
93.228 .772 -.03768 .12989
-
.2956
1
.2202
6
Item1 Equal .015 .90 .373 204 .710 .04486 .12035 - .2821
CXXXV
3 variance
s
assumed
2 .1924
3
6
Equal
variance
s not
assumed
.373
101.56
3
.710 .04486 .12027
-
.1937
1
.2834
3
Item1
4
Equal
variance
s
assumed
1.28
8
.25
8
-
.569
204 .570 -.06817 .11978
-
.3043
4
.1679
9
Equal
variance
s not
assumed
-
.582
106.03
8
.562 -.06817 .11720
-
.3005
3
.1641
8
Item1
5
Equal
variance
s
assumed
.902
.34
3
-
.980
204 .328 -.11562 .11793
-
.3481
4
.1168
9
Equal
variance
s not
assumed
-
1.00
2
105.96
1
.319 -.11562 .11543
-
.3444
7
.1132
2
Item1
6
Equal
variance
s
assumed
1.58
0
.21
0
-
1.13
9
204 .256 -.13576 .11916
-
.3707
0
.0991
8
Equal
variance
s not
assumed
-
1.17
1
107.35
4
.244 -.13576 .11591
-
.3655
2
.0940
1
CXXXVI
Item1
7
Equal
variance
s
assumed
.015
.90
2
-
.497
204 .620 -.05981 .12040
-
.2971
9
.1775
6
Equal
variance
s not
assumed
-
.500
102.54
5
.618 -.05981 .11974
-
.2973
0
.1776
7
HypothesisThree T-TEST GROUPS=smallscaleenterprise(1 2) /MISSING=ANALYSIS /VARIABLES=Item18 Item19 Item20 Item21 Item22 Item23 Item24 Item25 /CRITERIA=CI(.95). T-Test [DataSet2]
Group Statistics
smallscaleenterprise N Mean Std.
Deviation
Std. Error
Mean
Item18
Proprietors 57 2.8772 .80335 .10641
Employees 149 2.9329 .84361 .06911
Item19
Proprietors 57 2.8596 .87502 .11590
Employees 149 2.8859 .91186 .07470
Item20
Proprietors 57 2.8246 .88888 .11773
Employees 149 2.8255 .89088 .07298
CXXXVII
Item21
Proprietors 57 3.0000 .86603 .11471
Employees 149 3.0067 .79267 .06494
Item22
Proprietors 57 3.07018 .842184 .111550
Employees 149 3.02013 .809319 .066302
Item23
Proprietors 57 3.1404 .87502 .11590
Employees 149 3.0671 .85948 .07041
Item24
Proprietors 57 3.1930 .76622 .10149
Employees 149 3.1544 .66500 .05448
Item25
Proprietors 57 3.2281 .82413 .10916
Employees 149 3.1141 .75811 .06211
Independent Samples Test
Levene's
Test for
Equality
of
Variances
t-test for Equality of Means
F Sig
.
t df Sig.
(2-
tailed
)
Mean
Differenc
e
Std.
Error
Differenc
e
95%
Confidence
Interval of the
Difference
Lower Upper
Item1
8
Equal
variance
s
assume
d
.103
.74
8
-
.42
9
204 .668 -.05569 .12969 -
.31140 .20002
Equal
variance
-
.43
106.07
2
.662 -.05569 .12688 -
.30724 .19586
CXXXVIII
s not
assume
d
9
Item1
9
Equal
variance
s
assume
d
.162
.68
8
-
.18
7
204 .852 -.02626 .14046 -
.30320 .25069
Equal
variance
s not
assume
d
-
.19
0
105.31
7
.849 -.02626 .13789 -
.29965 .24714
Item2
0
Equal
variance
s
assume
d
.017
.89
7
-
.00
7
204 .995 -.00094 .13866 -
.27433 .27245
Equal
variance
s not
assume
d
-
.00
7
101.63
0
.995 -.00094 .13852 -
.27571 .27383
Item2
1
Equal
variance
s
assume
d
.674
.41
3
-
.05
3
204 .958 -.00671 .12669 -
.25650 .24308
Equal
variance
s not
assume
-
.05
1
93.994 .960 -.00671 .13181 -
.26843 .25501
CXXXIX
d
Item2
2
Equal
variance
s
assume
d
.088
.76
7
.39
3
204 .695 .050041 .127470
-
.20128
6
.30136
8
Equal
variance
s not
assume
d
.38
6
97.931 .701 .050041 .129766
-
.20747
8
.30756
1
Item2
3
Equal
variance
s
assume
d
.006
.93
6
.54
4
204 .587 .07324 .13453 -
.19200 .33848
Equal
variance
s not
assume
d
.54
0
99.821 .590 .07324 .13561 -
.19582 .34229
Item2
4
Equal
variance
s
assume
d
1.79
4
.18
2
.35
7
204 .721 .03862 .10812 -
.17456 .25180
Equal
variance
s not
assume
d
.33
5
90.093 .738 .03862 .11519 -
.19021 .26745
Item2 Equal 1.33 .25 .94 204 .347 .11398 .12098 - .35251
CXL
5 variance
s
assume
d
2 0 2 .12455
Equal
variance
s not
assume
d
.90
8
94.382 .366 .11398 .12559 -
.13537 .36333
Hypothesis Four
T-TEST GROUPS=smallscaleenterprise(1 2) /MISSING=ANALYSIS /VARIABLES=Item26 Item27 Item28 Item29 Item30 Item31 Item32 Item33 Item34 Item35 Item36 Item37 /CRITERIA=CI(.95). T-Test [DataSet2]
Group Statistics
smallscaleenterprise N Mean Std.
Deviation
Std. Error
Mean
Item26
Proprietors 57 3.2281 .82413 .10916
Employees 149 3.0872 .78785 .06454
Item27
Proprietors 57 3.3158 .80529 .10666
Employees 149 3.2953 .77550 .06353
Item28
Proprietors 57 3.1053 .79472 .10526
Employees 149 3.0336 .77474 .06347
Item29 Proprietors 57 3.1053 .77192 .10224
CXLI
Employees 149 3.0872 .77051 .06312
Item30
Proprietors 57 3.0351 .77839 .10310
Employees 149 3.3356 .70338 .05762
Item31
Proprietors 57 3.0526 .78878 .10448
Employees 149 3.3423 .66548 .05452
Item32
Proprietors 57 2.9298 .79865 .10578
Employees 149 3.1275 .59603 .04883
Item33
Proprietors 57 2.9298 .84218 .11155
Employees 149 3.0805 .67300 .05513
Item34
Proprietors 57 2.9123 .87179 .11547
Employees 149 3.0336 .72983 .05979
Item35
Proprietors 57 2.8947 .90008 .11922
Employees 149 3.1141 .70260 .05756
Item36
Proprietors 57 3.0702 .82071 .10871
Employees 149 3.1745 .67515 .05531
Item37
Proprietors 57 3.1930 .74255 .09835
Employees 149 3.0537 .75144 .06156
Independent Samples Test
Levene's
Test for
Equality
of
Variances
t-test for Equality of Means
F Sig. t df Sig.
(2-
tailed
)
Mean
Differenc
e
Std.
Error
Differenc
e
95%
Confidence
Interval of
the
Difference
CXLII
Lowe
r
Upper
Item2
6
Equal
variance
s
assumed
.595
.44
1
1.13
3
204 .258 .14082 .12428
-
.1042
1
.3858
6
Equal
variance
s not
assumed
1.11
0
97.492 .270 .14082 .12681
-
.1108
5
.3925
0
Item2
7
Equal
variance
s
assumed
.005
.94
2
.168 204 .867 .02049 .12207
-
.2201
9
.2611
6
Equal
variance
s not
assumed
.165 98.110 .869 .02049 .12415
-
.2258
8
.2668
6
Item2
8
Equal
variance
s
assumed
.100
.75
2
.590 204 .556 .07171 .12152
-
.1678
9
.3113
0
Equal
variance
s not
assumed
.583 99.161 .561 .07171 .12292
-
.1721
8
.3156
0
Item2
9
Equal
variance
s
assumed
.086
.76
9
.150 204 .881 .01801 .12006
-
.2187
0
.2547
3
Equal .150 101.25 .881 .01801 .12016 - .2563
CXLIII
variance
s not
assumed
8 .2203
4
7
Item3
0
Equal
variance
s
assumed
.704
.40
2
-
2.66
2
204 .008 -.30048 .11287
-
.5230
3
-
.0779
4
Equal
variance
s not
assumed
-
2.54
4
93.016 .013 -.30048 .11811
-
.5350
3
-
.0659
4
Item3
1
Equal
variance
s
assumed
.019
.88
9
-
2.65
1
204 .009 -.28965 .10925
-
.5050
6
-
.0742
5
Equal
variance
s not
assumed
-
2.45
8
88.175 .016 -.28965 .11785
-
.5238
4
-
.0554
6
Item3
2
Equal
variance
s
assumed
5.85
1
.01
6
-
1.92
9
204 .055 -.19769 .10246
-
.3997
1
.0043
3
Equal
variance
s not
assumed
-
1.69
7
81.014 .094 -.19769 .11651
-
.4295
1
.0341
2
Item3
3
Equal
variance
s
assumed
1.47
8
.22
6
-
1.33
8
204 .182 -.15071 .11266
-
.3728
4
.0714
2
Equal - 84.788 .229 -.15071 .12443 - .0967
CXLIV
variance
s not
assumed
1.21
1
.3981
2
0
Item3
4
Equal
variance
s
assumed
2.10
0
.14
9
-
1.00
9
204 .314 -.12128 .12014
-
.3581
5
.1156
0
Equal
variance
s not
assumed
-
.933
87.668 .354 -.12128 .13003
-
.3797
0
.1371
5
Item3
5
Equal
variance
s
assumed
3.28
9
.07
1
-
1.84
9
204 .066 -.21936 .11866
-
.4533
2
.0146
1
Equal
variance
s not
assumed
-
1.65
7
83.435 .101 -.21936 .13239
-
.4826
5
.0439
3
Item3
6
Equal
variance
s
assumed
.725
.39
6
-
.933
204 .352 -.10432 .11183
-
.3248
1
.1161
7
Equal
variance
s not
assumed
-
.855
86.554 .395 -.10432 .12197
-
.3467
6
.1381
2
Item3
7
Equal
variance
s
assumed
.009
.92
3
1.19
4
204 .234 .13929 .11665
-
.0907
1
.3692
9
CXLV
Equal
variance
s not
assumed
1.20
0
102.51
9
.233 .13929 .11603
-
.0908
4
.3694
2